REG - Centamin PLC - Full Year 2022 Results
16/03/2023 07:15
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RNS Number : 1386T Centamin PLC 16 March 2023
16 March 2023
Centamin plc
("Centamin" or "the Company")
(LSE:CEY, TSX:CEE)
Full year 2022 results
audited results for the twelve months ended 31 December 2022
MARTIN HORGAN, CEO, commented: "Centamin made great progress in 2022, a year
in which we celebrated the Sukari Gold Mine producing its 5 millionth ounce
underpinning the quality of the orebody which has 6 million ounces in Mineral
Reserves remaining and identified further upside potential. We spent the past
year successfully progressing our reinvestment plan and remain on track to
consistently return Sukari to production levels towards 500,000 ounces per
annum from 2024.
"In 2022, the Company delivered guidance for both production and costs,
despite global inflationary headwinds, and invested US$224 million in capital
projects at Sukari such as our flagship 36MW Solar farm which is reducing both
emissions and costs. We look forward to updating our stakeholders on our
decarbonisation roadmap to 2030, later this quarter.
"In terms of growth, Sukari achieved its second successive year of reserve
growth and across the wider portfolio, we commenced exploration work across
our EDX portfolio in Egypt and progressed our Doporo PFS which is expected to
be completed in the first half of 2023. The Company secured its inaugural
sustainability linked debt facility with a group of leading international
resource banks, adding financial flexibility to an already robust balance
sheet and enable us to deliver our identified growth opportunities."
FINANCIAL HIGHLIGHTS
· Revenue of US$788 million generated from sales of 438,638 oz at
an average realised gold price of US$1,794/oz
· Adjusted EBITDA of US$319 million, at a 40% margin
· Profit before tax of US$171 million
· Basic earnings per share ("EPS") of 6.29 US cents per share
· US$43 million of gross cost-savings in 2022, for a cumulative
US$116 million delivered of the US$150 million cost-saving target by 2023
· Capital structure review completed, establishing a capital
allocation framework that balances growth and stakeholder returns
· Strong balance sheet with cash and liquid assets of US$157 million,
as at 31 December 2022, excluding the US$150 million sustainability-linked
revolving credit facility which was announced on 22 December 2022, and
· The Board has proposed a final dividend of 2.5 US cents per share,
equating to US$29 million to be distributed to shareholders, subject to
shareholder approval at the annual general meeting on 23 May 2023, bringing
total distribution to shareholders for full year 2022 to US$58 million.
OPERATIONAL HIGHLIGHTS
· Sukari gold production of 440,974 oz, a 6% increase on 2021 and
in line with guidance
· Second consecutive year of meaningful growth of both resources
and reserves
· Successfully navigated the transition from contractor to
owner-operated at Sukari underground
· Commissioned 36MW(DC) solar plant, the largest global hybrid
solar farm to power a gold mine
· Completed Egypt's first airborne geophysical survey across the
full Sukari concession area, and
· Progressed Doropo PFS to imminent completion.
SUSTAINABILITY PERFORMANCE
· Record safety performance of eight million hours worked without a Lost
Time Injury at Sukari; previous record of 5 million for LTI free hours worked,
driving an 83% improvement in LTIFR from 2021 and a 13% improvement in TRIFR
· Increased our Egyptian female representation to 34 employees (from zero)
at Sukari; the introduction of female professionals at our sites has been
supported and accompanied by diverse and inclusive workforce training
· Expanded workforce training programme with a 62% increase in training
hours following roll-out of professional development framework for employees;
ongoing focus to promote national employment in leadership position through
the Group, and
· Commitment to 30% reduction in scope 1 and 2 emissions by 2030
remains on track; largest global hybrid solar farm to power a gold mine was
commissioned at Sukari in 2022, reducing annual consumption of diesel fuel for
power generation by 22%. Decarbonisation roadmap to be launched in Q1 2023.
2023 OUTLOOK
Guidance unchanged
· Gold production guidance range of 450,000 to 480,000 oz per annum
weighted towards H2 (45:55)
· Cash cost guidance range of US$840-990/oz produced and AISC guidance
range of US$1,250-1,400/oz sold, similar to the 2022 levels despite global
inflationary pressures including higher fuel prices
· Capex guidance is US$225 million, weighted towards H1 (55:45), as the
Company continues to identify growth and optimisation projects at Sukari,
including development of a gravity circuit; expansion of the dump leach
capacity; and commencement of the underground expansion. This also reflects
inflationary pressures on the contracted waste-stripping programme
specifically from higher fuel prices
· Exploration spend is budgeted at US$30 million, including US$23
million for the pre-development study work on the Doropo Project.
2023 KEY MILESTONES
· June 2023: Doropo Project (Côte d'Ivoire) complete
pre-feasibility study
· H2 2023: Sukari Gold Mine (Egypt) update Life of Mine Plan (NI
43-101), including underground expansion, and
· Announcements on the ongoing exploration programmes.
GROUP FINANCIAL SUMMARY
Units FY22 FY21* % H2 22 H1 22
Gold produced Oz 440,974 415,370 6% 237,076 203,898
Gold sold Oz 438,638 407,252 8% 235,051 203,587
Cash cost US$'000 402,546 359,868 12% 212,690 189,856
Unit cash cost US$/oz produced 913 866 5% 897 931
AISC US$'000 613,868 502,366 22% 319,756 294,112
Unit AISC US$/oz sold 1,399 1,234 13% 1,360 1,445
Avg realised gold price US$/oz 1,794 1,797 0% 1,730 1,872
Revenue US$'000 788,424 733,306 8% 406,638 381,786
Adjusted EBITDA US$'000 319,015 328,787 (3%) 165,899 153,116
Profit before tax US$'000 171,001 153,647 11% 86,254 84,747
Profit after tax attrib to the parent US$'000 72,490 101,527 (29%) 10,129 62,361
Basic EPS US cents 6.29 8.81 (29%) 0.88 5.41
Capital expenditure US$'000 283,543 240,872 18% 144,856 138,687
Adjusted capital expenditure US$'000 224,270 233,034 (4%) 113,571 110,699
Operating cash flow* US$'000 291,936 309,074 (6%) 164,079 127,857
Adjusted free cash flow* US$'000 (18,139) (6,802) 167% 7,630 (25,769)
*In the 2021 Consolidated Statement of Comprehensive Income, Finance costs
were included and disclosed in the line 'Other operating costs', in these
financial statements they are now separately disclosed in their own line and
as such 'Other operating costs' for 2021 have changed.
WEBCAST PRESENTATION and CONFERENCE CALL
The Company will host a conference call and webcast presentation today,
Thursday 16 March, at 08.30 GMT, to discuss the results with investors and
analysts, followed by an opportunity to ask questions. Please find below the
required participation details. A replay will be made available on the Company
website.
To join the webcast:
https://www.investis-live.com/centamin/63eb959d33aa1a120095c6ee/gqruu
(https://gbr01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.investis-live.com%2Fcentamin%2F63eb959d33aa1a120095c6ee%2Fgqruu&data=05%7C01%7Calexandra%40centaminplc.com%7C19b34dffb54342696b6208db0ead16f9%7Ca02403da39374fe8917b48e08012a5e7%7C0%7C0%7C638119908812026771%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=Xqys2ad6GGCisL5zHKAS7rtJCDVfpEykJ%2FcHC1jf970%3D&reserved=0)
Please allow a few minutes to register.
Dial-in telephone numbers:
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All other locations +44 (0) 203 936 2999
Participation access code: 640480
PRINT-FRIENDLY VERSION of the
results: www.centamin.com/investors/results-reports/
(http://www.centamin.com/investors/results-reports/)
About Centamin
Centamin is an established gold producer, with premium listings on the London
Stock Exchange and Toronto Stock Exchange. Following a period of 'reset'
including a significant refresh of the Board and management team, the Company
is now entering a growth phase, balanced with stakeholder returns. The
Company's flagship asset is the Sukari Gold Mine ("Sukari"), Egypt's largest
and first modern gold mine, as well as one of the world's largest producing
mines. Since production began in 2009 Sukari has produced over 5 million
ounces of gold, and today has 6.0Moz in gold Mineral Reserves. Through its
large portfolio of exploration assets in Egypt and Côte d'Ivoire, Centamin is
advancing an active pipeline of future growth prospects, including the Doropo
project in Côte d'Ivoire, and has over 3,000km(2) of highly prospective
exploration ground in Egypt's Nubian Shield.
Centamin practices responsible mining activities, recognising its
responsibility to deliver operational and financial performance and create
lasting mutual benefit for all stakeholders through good corporate
citizenship, including but not limited to in 2022, achieving new safety
records (8m hrs LTI-free), commissioning of the largest hybrid solar farm for
a gold mine (Sukari 36MW(DC) solar plant), sustaining a +95% Egyptian
workforce and a +60% Egyptian supply chain at Sukari.
FOR MORE INFORMATION please visit the website www.centamin.com
(http://www.centamin.com) or contact:
Centamin plc FTI Consulting
Alexandra Barter-Carse, Head of Corporate Communications Ben Brewerton / Sara Powell / Nick Hennis
investor@centaminplc.c (mailto:investor@centaminplc.com) om +442037271000
(mailto:investor@centaminplc.com)
centamin@fticonsulting.com (mailto:centamin@fticonsulting.com)
ENDNOTES
Guidance
The Company actively monitors the global geopolitical uncertainties and
macroeconomics, such as global inflation, and guidance may be impacted if the
supply chain, workforce or operation are disrupted.
Financials
Full year financial data points included within this report are audited.
Non-GAAP measures
This statement includes certain financial performance measures which are not
GAAP measures as defined under International Financial Reporting Standards
(IFRS). These include EBITDA and adjusted EBITDA, Cash costs of production,
AISC, Cash and liquid assets, Free cash flow and adjusted Free cash flow.
Management believes these measures provide valuable additional information for
users of the financial statements to understand the underlying trading
performance. An explanation of the measures used along with reconciliation to
the nearest IFRS measures is provided in the Financial Review.
Profit after tax attributable to the parent
Centamin profit after the profit share split with the Arab Republic of Egypt.
Royalties
Royalties are accrued and paid six months in arrears.
Cash and liquid assets
Cash and liquid assets include cash, bullion on hand and gold sales
receivables.
Movements in inventory
Movement in inventory on ounces produced is the movement in mining stockpiles
and ore in circuit while the movement in inventory on ounces sold is the net
movement in mining stockpiles, ore in circuit and gold in safe inventory.
Gold produced
Gold produced is gold poured and does not include gold-in-circuit at period
end.
Dividend
All dividends are subject to final Board approval and final dividends are
subject to shareholder approval at the Company's annual general meeting.
Forward-looking Statements
This announcement (including information incorporated by reference) contains
"forward-looking statements" and "forward-looking information" under
applicable securities laws (collectively, "forward-looking statements"),
including statements with respect to future financial or operating
performance. Such statements include "future-oriented financial information"
or "financial outlook" with respect to prospective financial performance,
financial position, EBITDA, cash flows and other financial metrics that are
based on assumptions about future economic conditions and courses of action.
Generally, these forward-looking statements can be identified by the use of
forward-looking terminology such as "believes", "expects", "expected",
"budgeted", "forecasts" and "anticipates" and include production outlook,
operating schedules, production profiles, expansion and expansion plans,
efficiency gains, production and cost guidance, capital expenditure outlook,
exploration spend and other mine plans. Although Centamin believes that the
expectations reflected in such forward-looking statements are reasonable,
Centamin can give no assurance that such expectations will prove to be
correct. Forward-looking statements are prospective in nature and are not
based on historical facts, but rather on current expectations and projections
of the management of Centamin about future events and are therefore subject to
known and unknown risks and uncertainties which could cause actual results to
differ materially from the future results expressed or implied by the
forward-looking statements. In addition, there are a number of factors that
could cause actual results, performance, achievements or developments to
differ materially from those expressed or implied by such forward-looking
statements; the risks and uncertainties associated with direct or indirect
impacts of COVID-19 or other pandemic, general business, economic,
competitive, political and social uncertainties; the results of exploration
activities and feasibility studies; assumptions in economic evaluations which
prove to be inaccurate; currency fluctuations; changes in project parameters;
future prices of gold and other metals; possible variations of ore grade or
recovery rates; accidents, labour disputes and other risks of the mining
industry; climatic conditions; political instability; decisions and regulatory
changes enacted by governmental authorities; delays in obtaining approvals or
financing or completing development or construction activities; and discovery
of archaeological ruins. Financial outlook and future-ordinated financial
information contained in this news release is based on assumptions about
future events, including economic conditions and proposed courses of action,
based on management's assessment of the relevant information currently
available. Readers are cautioned that any such financial outlook or
future-ordinated financial information contained or referenced herein may not
be appropriate and should not be used for purposes other than those for which
it is disclosed herein. The Company and its management believe that the
prospective financial information has been prepared on a reasonable basis,
reflecting management's best estimates and judgments at the date hereof, and
represent, to the best of management's knowledge and opinion, the Company's
expected course of action. However, because this information is highly
subjective, it should not be relied on as necessarily indicative of future
results. There can be no assurance that forward-looking statements will prove
to be accurate, as actual results and future events could differ materially
from those anticipated in such information or statements, particularly in
light of the current economic climate and the significant volatility, the
risks and uncertainties associated with the direct and indirect impacts of
COVID-19. Forward-looking statements contained herein are made as of the date
of this announcement and the Company disclaims any obligation to update any
forward-looking statement, whether as a result of new information, future
events or results or otherwise. Accordingly, readers should not place undue
reliance on forward-looking statements.
LEI: 213800PDI9G7OUKLPV84
Company No: 109180
CEO Statement
It is a pleasure to report on the tremendous progress Centamin made over 2022
- a year in which we celebrated a memorable milestone with the Sukari Gold
Mine producing it's 5 millionth ounce. This achievement is rare for most gold
mines and testament to the scale and quality of the Sukari orebody. What is
more remarkable is that Sukari has a further 6 million ounces in Mineral
Reserves, equating to a 14-year life of mine, with further upside potential as
we have demonstrated by adding nearly two million ounces of gross Mineral
Reserves over the last two years. We remain confident in delivering more
geological growth, both at Sukari and across the wider portfolio.
As custodians of this world class asset, Centamin recognises the business and
societal importance in building a responsible culture that values and supports
people, creating opportunity through jobs, infrastructure, education,
alongside developing our assets and delivering strong shareholder returns. We
practise responsible mining activities and take pride in setting the example
for our growing industry within Egypt and as we continue to develop our
exploration projects in Côte d'Ivoire. In addition to paying in excess of
US$800 million to Egypt in profit share and royalties since production began,
over 95% of our workforce are employed locally to the country of operation -
78% of which are in leadership positions at Sukari - and 68% of total
procurement is spent domestically to the country of operation. We are living
and breathing our stated company purpose 'to create opportunity through
responsible mining'.
PERFORMANCE
2022 was another busy year with progress made against our stated plans. We
completed the second year of our three-year Sukari reset plan to return the
asset to production levels towards 500,000 ounces per annum from 2024.
Against a challenging macroeconomic backdrop, the Centamin team successfully
navigated the transition from contractor to owner-operated within the Sukari
underground and delivered production, costs and capital projects in line with
2022 guidance. Sukari produced 440,974 ounces of gold and with US$224 million
invested in adjusted sustaining and non-sustaining growth capital projects as
we continued the reinvestment programme to optimise the asset for the longer
term. At the same time we implemented further initiatives that will deliver
more gold at better costs while reducing our carbon emissions over the
remaining substantial mine life, most notably with the commissioning of the
Sukari 36MW(DC) solar plant.
Financially, based on an annual realised gold price of US$1,794/oz, we
generated gross revenues of US$788 million. We were not immune to the global
inflationary cost pressures experienced in 2022 but our prudent approach to
forecasting and ongoing cost-savings programme enabled us to maintain our 2022
cost guidance throughout the year and deliver within the stated range. All-in
sustaining costs were US$1,399/oz sold and cash costs were US$913/oz produced
and we continue to seek opportunities to further improve our cost profile
going forward. EBITDA for the year was US$319 million, up 9%, and with a
continued strong EBITDA margin of 40%.
STRATEGIC PROGRESS
Sukari Value Maximisation
Geologically, we continue to unlock the mineral resource potential within the
Sukari orebody and the wider 160km(2) Sukari Concession area. Our improved
geological understanding resulted in the second consecutive year of meaningful
growth of both resources and reserves at unchanged cut-off grades. The open
pit Mineral Reserve gain replaced annual depletion for the first time since
2015, while the underground Mineral Reserves of 1.2 million ounces represents
a threefold increase since 2020, net of mining depletion, further supporting
our underground expansion plans for benefit from 2024.
The Mineral Resource Management team, responsible for the orebody stewardship,
has developed a rolling five-year exploration plan focussed on unlocking the
potential of the orebody, targeting resource to reserve conversion and further
extensional growth.
Beyond the orebody, the Exploration team has been focussed on delineating
potential satellite deposits to provide additional ore feed to the Sukari mill
over the life of mine. A highlight of the 2022 exploration programme was
completing Egypt's first airborne geophysical survey across the full
Concession area. Introducing this tried and tested first principles
exploration tool has given us a geological dataset which we can utilise across
our wider Eastern Desert Exploration ("EDX") blocks across the Egyptian Nubian
shield.
Operationally, total material moved outperformed with the open pit accelerated
waste stripping programme and the underground transition to owner-mining both
delivering increased operating flexibility and further safety, cost and
productivity gains.
The open pit mining operation delivered another record year of material moved
of 136 million tonnes, through a combination of our own mining fleet and
contracted waste-stripping programme. The benefits of this investment were
evident through 2022 as open pit mining flexibility increased from one
operating area in 2020 to four operating areas as we exited 2022. In
parallel to the increase in tonnes mined in the open pit, owner fleet
optimisations have delivered a 18% productivity gain in total mined tonnes per
hour since 2020. This has included the full implementation of the high
productivity truck trays, improvement in haul cycle planning and road
condition maintenance.
The underground mine went through a significant period of change during the
year. Following an international tender process in 2021 planned to coincide
with the expiry of the underground mining contract in late 2021, the decision
was taken to switch to an owner mining model based on the extended underground
mine life and expected cost savings and productivity gains. During Q1 2022 the
underground team implemented the handover plan as the contractor exited the
business and the Sukari team assumed full responsibility for operations from
Q2 2022. Performance improved over 2022 as operations bedded down and new
equipment was delivered to site with productivity gains and cost savings
realised over the period compared to the contracting costs. With this
transition now complete, the operations have begun 2023 in excellent shape as
we seek to maximise underground production.
Introducing paste-fill within the underground in 2023 will enable us to
maximise ore extraction in a safer manner while providing further cost and
productivity gains over and above the current method of cemented waste rock
fill. Construction of the paste-fill plant progressed as expected in 2022 and
we expect to start commissioning in Q2 2023.
With the underground reserve life growing from three to approximately ten
years since 2021 and an active pipeline of further growth targets identified,
we carried out an independent underground option study to assess the potential
to increase the mining rates. The study concluded that underground ore mining
could sustainably be increased from the current life of mine average of 1Mt
per annum to a 1.5Mt per annum with low project execution risk and low capital
intensity. Work in 2023 will focus on fully engineering and planning this
expansion option for implementation in 2024.
Growth & Diversification
Eastern Desert Exploration ("EDX")
Prior to the commencement of fieldwork our team completed remote desktop
assessment of the three exploration blocks spanning 3,000km(2), which enabled
a quick and focussed start to the fieldwork programme. Our strategy remains
twofold: 1) identify potential deposits within trucking distance of the Sukari
mill and 2) explore for significant discoveries which could support standalone
operations. Utilising a predominantly Egyptian staffed team, exploration
commenced in May 2022 on the Nugrus block, which is adjacent to the Sukari
Concession area, before moving to the Um Rus and Najd blocks to the north.
Geochemical reconnaissance work using BLEG sampling was carried across the
license areas, followed by more detailed soil sampling, mapping of known
artisanal workings and combined with the remote sensing work, has generated
several targets for drill testing during the balance of 2023.
In parallel with the exploration work, Centamin has been part of an industry
group working with the Egyptian government to finalise the exploitation terms.
Good progress has been made and we anticipate finalisation of the exploitation
terms in H1 2023.
Doropo
We believe our Doropo Project in Côte d'Ivoire has the potential to be a mine
which can significantly increase overall group production, while making a
material contribution to the wider Ivorian economy and its people.
Having completed the 124,000 metre drilling campaign, we upgraded the resource
and constrained it within economic open pit shells for the first time. The
resultant 2.5Moz of Indicated Resources is at an average grade of 1.52g/t,
representing an 22% increase in grade estimated for the 2021 PEA.
Encouragingly we continue to identify additional mineralisation targets within
the Mineral Resource area and regionally, across the broader license holding
that have the potential to further grow the gold endowment and further
increase the life of the project.
Metallurgical test work carried out in 2022 identified an opportunity to
simplify the processing flowsheet by removing the flotation and regrind
circuit, which could have a positive impact on the economics of the project
and will be included in the PFS.
The environmental, social impact assessment work continued through 2022,
assessing the environmental and social baselines which will enable the project
design and layout to be developed in a way which is sympathetic to the local
conditions while enabling the project to be assessed in line with
international good practice.
The PFS is near completion and we are excited to share those results and
commence the Definitive Feasibility Study to enable the project to meet its
permitting timeline.
Stakeholder Returns
For Centamin, 2022 was a landmark year for progress against our ESG
priorities.
Safety
We finished 2022 having achieved a new safety record of eight million hours
worked without a Lost Time Injury at Sukari, breaking the previous record of 5
million for LTI free hours worked and at the time of writing this we are
currently at 9.1 million LTI-free. This has driven an 83% improvement in LTIFR
from 2021, and we recorded a 13% improvement in TRIFR. This excellent
achievement reflects management's on-going focus on safety in the workplace
and I believe that safety performance is a good proxy for operational ability
- a safe mine is a well-run mine and while we are proud of this achievement,
we will not allow complacency to distract us from striving to further improve
on this result into 2023 and beyond.
Diversity & Inclusion
We believe diversity and promoting inclusion is an ethical imperative for a
sustainable business. At Centamin we promote a culture of belonging
throughout the business, where everyone is respected, valued and empowered to
excel within the workplace, and importantly, by creating an inclusive culture
that reflects the diversity of the countries in which we operate. In 2021,
Centamin welcomed changes to the Egyptian legal and regulatory framework that
removed restrictions to the employment of women in the mining sector. Through
broad and concerted leadership, we are proud to have increased our Egyptian
female representation to 34 employees (from zero) at Sukari and on our
Egyptian Eastern Desert Exploration blocks ("EDX"), as we seek to improve our
gender balance in Egypt and across the Group. I would also like to give
specific mention to our trailblasing colleague, Sara Mohamed Elsayed, who was
the first Egyptian female employee at a mine site. Sara joined Sukari in 2021
as Environmental Superintendent and was named one of the 100 Global
Inspirational Women in Mining for 2022.
The Introduction of female professionals at our sites has been supported and
accompanied by workforce training on the benefits of a diverse and inclusive
workplace, employee engagement to identify and resolve barriers to the
advancement of women, including something as basic as female PPE to maximise
the comfort and safety of all employees. These efforts represent a significant
milestone in the history of Sukari and the Egyptian mining sector more
broadly.
Workplace development
We have sought to create an environment in which our people can develop and
thrive and in 2022 there was a 62% increase in workforce training hours. At
Sukari we have put in place a professional development framework that aims to
establish a shared understanding of the required skills to achieve proficiency
in each and every role; the critical behaviours for successful performance at
Centamin; and ultimately the objective to develop and promote our local
workforce through the organisation. Increased levels of training was provided
to support the progression of our employees to a proficient level, including
certified leadership training to our management and supervisory team. This is
an ongoing focus as we seek to promote national employment in leadership
positions throughout the Group.
Decarbonisation
In 2022, we commissioned the largest global hybrid solar farm to power a gold
mine. The 36MW(DC) solar plant reduces our annual consumption of diesel fuel
for power generation by 22% (up to 70,000 litres of diesel displacement per
day), significantly reducing costs and Scope 1 GHG emissions by approximately
60,000 tCO2-e per annum. Solar, combined with the productivity gains from
implementation of the high productivity truck trays are two tangible
achievements in 2022.
Our vision for a low carbon future is a mine with sources of onsite and
imported renewable energy, reductions in absolute energy consumption through
efficient operational strategy and new technologies, staged electrification of
our mobile fleet and partnerships with our suppliers to select low carbon
options and increase recycling in our supply chain. In 2022, we studied
opportunities to reduce the operational emission of Sukari over the life of
mine, including sourcing clean and lower carbon power through connection to
the national grid and further expansion of our onsite renewable energy
production. We have set an interim climate target of 30%, to reduce our Scope
1 and 2 GHG emissions by 2030, compared to a 2021 base-year. This would put us
on a Paris-aligned trajectory to limit global warming to 'well below' 2°C by
2050.
Shareholder dividends
Our commitment to stakeholder returns includes our dividend commitment to our
shareholders. Our sustainable dividend policy of returning a minimum of 30% of
free cash flow in cash dividends to shareholders has amassed an impressive
nine-year track record, distributing a total of US$834 million, including
today's proposed final dividend, since 2014.
Given the potential scale of the organic opportunities available to Centamin,
Sukari cashflows and our robust balance sheet, we have been seeking to
provide our investors with exposure to our growth projects while maintaining
our approach to dividend payments.
2023 OUTLOOK
In 2021, we commenced the reset with which to lay the foundation for long-term
success. 2022 was about execution and delivery into not just our stated
guidance but on all our projects and promises. 2023 is about extending our
track record of delivery and building on that platform for growth.
In 2023, we are forecasting increased production of 450,000 to 480,000 ounces
and targeting lower all-in sustaining costs with a guided range of
US$1,250-US$1,400 per ounce sold. This year capex will be US$225 million,
including the last full year of contracted waste-stripping programme and
additional non-sustaining projects such as the gold gravity circuit, expansion
of the north dump leach, completion of the paste-fill plant and ongoing
development of the tailings storage facility.
We will continue to deliver into our geological exploration programme at the
Sukari orebody and across the concession area while we complete the updated
life of mine plan incorporating the underground expansion potential and mining
areas of bonanza grades.
The most significant decarbonisation and cost savings opportunity identified
for 2023 is the ability to connect to the Egyptian national electricity grid
which has recently been extended to within 30km of the Sukari mine site. If
successful, this would enable the operations to run on a combination of the
current solar generated power and grid, and therefore displacing the current
site thermal power generation using diesel.
THANK YOU
Thank you to the Board, shareholders, and wider stakeholders for their
support, engagement and feedback. I would like to thank everyone at Centamin,
our colleagues and contractors, for their hard work, dedication, passion and
enthusiasm. What we have achieved in a few short years is significant and
provides a platform from which we can begin our journey to developing a
multi-asset, multi-jurisdictional gold producer.
Martin Horgan
Chief Executive Officer
FINANCIAL REVIEW
Ross Jerrard commented: "Our strong balance sheet, underpinned by a resilient
business with increased capacity for growth, gives us the flexibility and
strength to deliver stakeholder returns."
Centamin is a robust business, committed to responsible mining. In 2020 we set
out bold capital reinvestment plans required to sustain our business and drive
higher production and improve margins for the long term, and for the last two
years we have delivered on those plans.
Despite persisting global supply-side issues and global inflation, our focus
is on what we can control. We do this with rigorous planning and subsequent
disciplined compliance to plan, a thriving culture of continuous improvement,
and active risk and opportunity assessment to ensure we don't stop at the
minimum but are always looking to improve.
FINANCIAL PERFORMANCE
In 2022, Centamin delivered a resilient financial performance that was in line
with our expectations and guidance for the year. Notwithstanding, the Group's
results are significantly affected by movements in the gold price, input
costs, particularly in consumables and fuel, and to a lesser degree foreign
exchange rates.
Revenues increased year-on-year by 8% to US$788 million, from annual gold
sales of 438,638 ounces, up 8%, at an average realised price of US$1,794 per
ounce, with no significant movement year-on-year. A total of 13,485 ounces of
unsold gold bullion was held on-site at year end, due to timing of gold
shipments across the year end.
As a Group, Adjusted EBITDA was US$319 million, at a 40% EBITDA margin,
principally driven by;
· a 6% increase in gold production, as scheduled, at similar
average realised gold prices as compared to last year; offset by
· a 24% increase in the combined open pit and underground material
mined, some of which has been capitalised to mining properties as a waste
stripping asset
· higher fuel, oil and lubricants costs to the value of US$72
million due to increases in the fuel cost per litre coupled with increased
production
· US$53 million additional spend on consumables due to increases in
reagent prices and increased production in the year
Profit before tax increased by 11% to US$171 million, due to the factors
below, with basic earnings per share decreasing by 29% to 6.29 US cents.
· an 8% increase in revenue, in line with increased gold sales as
planned
· a 16% increase in other income; offset by
· a 1% increase in other operating costs, mainly due to a 10%
increase in royalties
· a 114% increase in greenfield exploration and evaluation
expenditure, and
· a 12% increase in cost of sales
As expected, and in line with our three year reinvestment plans, Centamin's
cash flows and earnings were positively impacted in 2022 by higher gold
production and sales, offset by higher costs and increased capital
expenditure. Operational cash flow decreased by 6% to US$292 million. Cash
flows from investing activities were impacted mainly by gross capital
expenditure of US$276 million, predominantly invested in sustaining the
long-term production from Sukari. Adjusted Group free cash flow declined to
negative US$18 million, after profit share distribution of US$35 million to
our Egyptian partner, EMRA, and US$27 million advancing our organic growth
pipeline at our exploration projects Doropo, EDX and ABC.
STRINGENT COST MANAGEMENT
Our judicious approach to forecasting and stringent cost management meant we
were able to counter some of the global inflationary cost pressures last year
and delivered guidance as stated at the beginning of 2022. Good progress was
made and we are confident we will make our US$150 million target of cost
savings by the end of 2023. As at 31 December 2022 we had extracted US$116
million of sustainable cost savings and remain motivated to find further
opportunities.
Cash costs of production were US$913 per ounce produced, up 5%, reflecting a
24% increase in total open pit mined tonnes, and a 2% increase in tonnes
processed, total underground mined tonnes remained flat year on year and a 6%
increase in gold ounces produced. AISC was US$1,399 per ounce sold, up 13%,
mainly due to a 11% increase in mine production costs, 9% increase in
sustaining corporate costs and a 55% increase in sustaining capital costs.
This was partially offset by an 8% increase in gold ounces sold (which was as
scheduled and in line with guidance).
Capitalisation of open pit waste-stripping
The largest investment in 2022 was on the accelerated waste-stripping
(deferred waste-stripping) which added US$141 million to our balance sheet,
US$89 million was included in non-sustaining capital expenditure and related
specifically to the work done by the waste-mining contractor, with the balance
of US$52 million allocated to sustaining capital expenditure, which was waste
material mined by the Centamin fleet above the life of mine strip ratio. Some
deferred waste-stripping has already been amortised in the year based on ore
extracted from the areas mined.
As more fully described in note 2.9 to the financial statements and required
by the Group's financial reporting standards, from 2021, capitalised deferred
stripping costs are included in 'Mine Development Properties' and amortised
using the unit of production method based on total ounces produced for the
'component' of the orebody, which is defined as the respective 'stage' of the
open pit mine plan. Capitalisation occurs when the strip ratio exceeds the
life of mine strip ratio for that stage. Only the costs related to the excess
stripping are capitalised. In line with the accelerated stripping programme
(2022-2024) we expect to be above the life of mine strip ratio, resulting in a
larger quantum to be capitalised to the balance sheet.
STRONG BALANCE SHEET
Centamin closed 2022 financial year with cash and liquid assets of US$157
million. As announced on 22 December 2022, we secured the first piece of
corporate debt and on 13 March 2023, all conditions precedent were met
regarding the US$150 million sustainably linked revolving credit facility
("RCF"), significantly increasing the Company's financial flexibility to fund
growth projects across the portfolio. Initially, the focus will be Sukari.
Under the terms of our Concession Agreement growth capital invested is
recovered over three years, making these investments ideally suited for the
structure of the RCF.
APPROACH TO CAPITAL ALLOCATION
Capital allocation continues to be disciplined and closely qualified against
value creation. The Company continues to exercise a balanced approach to
responsibly maximising operating cash flow generation, reinvesting for future
growth and prioritising sustainable shareholder returns. The Company's
liquidity and strength of the balance sheet is fundamental to the longevity of
the business and is seriously considered when assessing capital allocation.
Centamin has an active growth pipeline through results-driven exploration and
continually assesses inorganic growth opportunities. Our organic projects are
self-funded but before capital is allocated they are routinely ranked based on
results against our development criteria and prospective returns.
In 2022, a key focus was on improving operational efficiencies to achieve
consistent operational performance with US$165 million spent on sustaining
capital expenditure and US$119 million on non-sustaining, or 'growth' capital
expenditure. Growth projects include the construction of the hybrid solar
plant, reducing the reliance on fossil fuels and improving operating costs,
and ongoing construction of the underground paste-fill plant.
Impressive progress was made on project delivery as we achieved several
further important milestones, including initiating business improvements such
as completion of the preparatory work on centralising our accounting and
internal control systems across the Group in 2022, which will enable faster
and more efficient access to our numbers, ahead of planned implementation in
2023.
2022 dividend
Stakeholder, and specifically shareholder returns, are central to our Company
strategy. Centamin were one of the first gold producers to pay dividends under
a structured policy. We have built a nine-year track record of returning cash
to shareholders, based on our policy linked to free cash flow generation
before growth investment. Our dividend policy makes firm commitments on
capital allocation, meaning shareholder interests are always at the centre of
what we do.
Consistent with the Company's commitment to returning cash to shareholders,
and recognising 2022 as the peak reset year, the Board proposes a 2022 final
dividend, for the year ended 31 December 2022 of 2.5 US cents per share
(c.US$29 million), bringing the proposed total dividend for 2022 to 5 US cents
per share (c.US$58 million):
· Interim 2022 dividend paid: 2.5 US cents per share
· Final 2022 dividend proposed: 2.5 US cents per share
The final 2022 dividend is subject to shareholder approval at the 2023 AGM on
23 May 2023 and following approval would be paid on 23 June 2023.
OUTLOOK
We are fully focused on managing the bottom line of the business so that we
can maximise the value at Sukari and deliver growth and diversification
combined with sustainable stakeholder returns. We have budgeted for similar
costs in 2023 as 2022, accounting for rising input costs, driven by higher
consumer price inflation within our operating countries, supply chain
pressures on fuel, consumables and shipping costs and tighter labour markets.
We have prudently decided not to budget any offsetting impacts of our ongoing
cost-savings and improving operating efficiencies and productivity gains until
we have a better sense of the longer-term inflationary environment.
The previous two years have been largely focused on business transformation
and building our geological understanding. Today, we are excited by the
additional value that is organically within our grasp and we are pursuing to
capture of this upside to achieve our goals across growth and returns.
Ross Jerrard
Chief Financial Officer
primary statements highlights
Year ended Year ended
31 December 2022
31 December 2021
US$'000
US$'000
Revenue 788,424 733,306
Revenue from gold and silver sales for the year increased by 8% year-on-year
to US$788 million (2021: US$733 million) with the year-on-year average
realised gold price remaining flat at US$1,794 per ounce sold (2021: US$1,797
per ounce sold) complimented by an 8% increase in gold ounces sold to 438,638
ounces (2021: 407,252 ounces).
Year ended Year ended
31 December 2022
31 December 2021
US$'000
US$'000
Cost of sales (544,075) (487,376)
Cost of sales represents the cost of mining, processing, refining, transport,
site administration, depreciation, amortisation and movement in production
inventories. Cost of sales is up 12% year-on-year to US$544 million, mainly as
a result of:
· 11% increase (US$40 million) in total mine production costs from US$368
million to US$409 million (+ve), primarily due to the following drivers:
o a 30% increase in processing costs (US$47 million) (+ve). The increase was
driven by price increases on fuel. Diesel fuel is mainly consumed at Sukari
for the process plants power generation; offset by
o a 3% decrease in open pit mining costs (US$4 million) (-ve); and
o a 6% decrease in administration costs (US$3 million) (-ve)
o There was no significant change in the underground mining costs.
· 5% increase in depreciation and amortisation charges year-on-year from
US$139 million to US$146 million (+ve). This increase was mainly due to:
o a US$284 million in net additions to property, plant and equipment (excl.
capital work in progress) which increased the associated depreciation and
amortisation charges; in addition to higher gold production in the year
Year ended Year ended
31 December 2022
31 December 2021
US$'000
US$'000
Dividend paid - non-controlling interest in SGM (35,492) (75,200)
The profit share payments during the year are reconciled against SGM's audited
financial statements. Any variation between payments made during the year
(which are based on the Company's estimates) and the audited financial
statements, may result in a balance due and payable to EMRA or advances to be
offset against future distributions. SGM's 30 June 2022 financial statements
have been audited and signed off.
Refer to note 1.3.1.2 in the notes for details of the treatment and disclosure
of the EMRA profit share.
CAPITAL EXPENDITURE
The following table provides a breakdown of the total capital expenditure of
the Group:
Year ended Year ended
31 December 2022
31 December 2021
US$'000
US$'000
Underground exploration 8,636 13,741
Underground mine development 32,107 34,900
Other sustaining capital expenditure 124,162 57,513
Total sustaining capital expenditure 164,905 106,154
Non-sustaining exploration expenditure 3,539 2,202
Other non-sustaining capital expenditure(1) 115,099 132,516
Total gross capital expenditure 283,543 240,872
Less:
Sustaining element of waste stripping capitalised(2) (51,527) (7,838)
Capitalised Right of Use Assets (7,746) -
Adjusted capital expenditure (after reclassification) 224,270 233,034
(1) Non-sustaining capital expenditure included further spend on the solar
plant, underground paste-fill plant and the Capital Waste Stripping.
Non-sustaining costs are primarily those costs incurred at 'new operations'
and costs related to 'major projects at existing operations' that will
materially benefit the operation.
(2) Reclassified from operating expenditure.
EXPLORATION EXPENDITURE
The following table provides a breakdown of the total exploration expenditure
of the Group:
Year ended Year ended
31 December 2022
31 December 2021
US$'000
US$'000
Greenfield exploration
Burkina Faso 2,928 2,380
Côte d'Ivoire 25,120 11,499
Egypt - Eastern Desert Exploration 1,675 -
Total greenfield exploration expenditure 29,723 13,879
Brownfield exploration
Sukari Tenement 12,175 15,943
Total brownfield exploration expenditure 12,175 15,943
Total exploration expenditure 41,898 29,822
Exploration and evaluation expenditure comprises expenditure incurred for
exploration activities primarily in Côte d'Ivoire and in the new Egypt
greenfield permit areas. Greenfield exploration and evaluation costs
(excluding Burkina Faso) increased by US$15 million or 133% as more
exploration and evaluation work specifically drilling and assaying at the two
Côte d'Ivoire sites was done in 2022 as compared to 2021 as well as the
commencement of exploration work in the new Egypt permit areas. The brownfield
capitalised exploration costs on the Sukari concession area decreased by US$4
million or 24% year on year.
The spend in Burkina Faso is mainly on key services and other regulatory
obligations required as the process to formally exit the project is currently
underway.
SUBSEQUENT EVENTS
As referred to in note 5.2, subsequent to the year end, the Board proposed a
final dividend for 2022 of 2.5 US cents per share. Subject to shareholder
approval at the annual general meeting on 23 May 2023, the final dividend will
be paid on 23 June 2023 to shareholders on record date of 2 June 2023.
Also refer to note 5.1 in the financial statements for more information on the
Law 32 judgement that was handed down in January 2023.
The Company's compliance requirements and obligations in respect of the US$150
million Revolving Credit Facility had not yet commenced as at 31 December 2022
as there were certain conditions precedent that were still to be satisfied to
make the agreement effective. The conditions precedent were met on 13 March
2023 subsequent to year end and before the annual financial statements were
signed and the facility is available for draw down from this date the
conditions precedent were met.
Other than as noted above, there were no other significant events occurring
after the reporting date requiring disclosure in the financial statements.
NON‑GAAP FINANCIAL MEASURES
1) EBITDA and adjusted EBITDA
EBITDA is a non‑GAAP financial measure, which excludes the following from
profit before tax:
· Finance costs
· Finance income
· Depreciation and amortisation
Management considers EBITDA a valuable indicator of the Group's ability to
generate liquidity by producing operating cash flow to fund working capital
needs and capital expenditures. EBITDA is also frequently used by investors
and analysts for valuation purposes whereby EBITDA is multiplied by a factor
or 'EBITDA multiple' that is based on an observed or inferred relationship
between EBITDA and market values to determine a company's approximate total
enterprise value. EBITDA is intended to provide additional information to
investors and analysts and does not have any standardised definition under
IFRS and should not be considered in isolation or as a substitute for measures
of performance prepared in accordance with IFRS.
EBITDA excludes the impact of cash cost of production and income of financing
activities and taxes, and therefore is not necessarily indicative of operating
profit or cash flow from operations as determined under IFRS. Other companies
may also calculate EBITDA differently. The following table provides a
reconciliation of EBITDA to profit for the year before tax.
Adjusted EBITDA removes the effect of transactions that are not core to the
Group's main operations, like adjustments made to normalise earnings, for
example profit on financial assets at fair value through profit or loss,
impairments of property, plant and equipment, non-current mining stockpiles
and exploration and evaluation assets.
Reconciliation of profit before tax to EBITDA and adjusted EBITDA:
31 December 2022 31 December 2021
US$'000
US$'000
Profit for the year before tax 171,001 153,647
Finance income (1,214) (196)
Finance costs(1) 2,459 673
Depreciation and amortisation 146,769 139,455
EBITDA 319,015 293,579
Add back/less:(2)
Impairments of non-current assets - 35,208
Adjusted EBITDA 319,015 328,787
(1) In the 2021 Consolidated Statement of Comprehensive Income, Finance
costs were included and disclosed in 'Other operating costs', in the current
year they are now separately disclosed in their own line hence the change on
the Finance Costs number in 2021.
(2) Adjustments made to normalise earnings for example profit on
financial assets at fair value through profit or loss, impairments of
property, plant and equipment, non-current mining stockpiles and exploration
and evaluation assets.
2) Cash cost of production per ounce produced and sold and all-in sustaining
costs ("AISC") per ounce sold calculation
Cash cost of production and AISC are non-GAAP financial measures. Cash cost of
production per ounce is a measure of the average cost of producing an ounce of
gold, calculated by dividing the operating costs in a period by the total gold
production over the same period. Operating costs represent total operating
costs less sustaining administrative expenses, royalties, depreciation and
amortisation. Management uses this measure internally to better assess
performance trends for the Company as a whole. Management considers that, in
addition to conventional measures prepared in accordance with GAAP, certain
investors use such non-GAAP information to evaluate the Company's performance
and ability to generate cash flow. Management considers that these measures
provide an alternative reflection of the Group's performance for the current
year and are an alternative indication of its expected performance in future
periods. Cash cost of production is intended to provide additional
information, does not have any standardised meaning prescribed by GAAP and
should not be considered in isolation or as a substitute for measures of
performance prepared in accordance with GAAP. This measure is not necessarily
indicative of operating profit or cash flow from operations as determined
under GAAP. Other companies may calculate these measures differently.
During June 2013 the World Gold Council ("WGC"), an industry body, published a
Guidance Note on the 'all in sustaining costs' metric, which gold mining
companies can use to supplement their overall non-GAAP disclosure. AISC is an
extension of the existing 'cash cost' metric and incorporates all costs
related to sustaining production and in particular recognising the sustaining
capital expenditure associated with developing and maintaining gold mines. In
addition, this metric includes the cost associated with developing and
maintaining gold mines. This metric also includes the cost associated with
corporate office structures that support these operations, the community and
rehabilitation costs attendant with responsible mining and any exploration and
evaluation costs associated with sustaining current operations. AISC US$/oz is
arrived at by dividing the dollar value of the sum of these cost metrics, by
the ounces of gold sold (as compared to using ounces produced which is used in
the cash cost of production calculation).
On 14 November 2018 the World Gold Council published an updated Guidance Note
on 'all-in sustaining costs' and 'all-in costs' metrics. Per their press
release it was expected that companies have chosen to use the updated guidance
from 1 January 2019 or on commencement of their financial year if later. The
Group has applied the updated guidance from 1 January 2019 with no impact on
our results or comparatives.
Reconciliation of cash cost of production per ounce produced:
31 December 2022 31 December 2021
Mine production costs (note 2.3) US$'000 408,543 368,327
Less: Refinery and transport US$'000 (2,324) (2,264)
Movement of inventory(1) US$'000 (3,673) (6,195)
Cash cost of production - gold produced US$'000 402,546 359,868
Gold produced - total (oz.) oz 440,974 415,370
Cash cost of production per ounce produced US$/oz 913 866
1) The movement in inventory on ounces produced is only the net
movement in mining stockpiles and ore in circuit while the movement in ounces
sold is the net movement in mining stockpiles, ore in circuit and gold in safe
inventory.
A reconciliation has been included below to show the cash cost of production
metric should gold sold ounces be used as a denominator.
Reconciliation of cash cost of production per ounce sold:
31 December 2022 31 December 2021
Mine production costs (note 2.3) US$'000 408,543 368,327
Royalties US$'000 23,842 21,672
Movement of inventory(1) US$'000 (6,789) (15,081)
Cash cost of production - gold sold US$'000 425,596 374,918
Gold sold - total (oz.) oz 438,638 407,252
Cash cost of production per ounce sold US$/oz 970 921
31 December 2022((1)) 31 December 2021(1)
Movement in inventory
Movement in inventory - cash (above) US$'000 (6,789) (15,081)
Effect of depreciation and amortisation - non-cash US$'000 17,448 35,049
Movement in inventory - cash & non-cash (note 2.3) US$'000 10,659 19,968
(1) The movement in inventory on ounces produced is only net the
movement in mining stockpiles and ore in circuit while the movement in ounces
sold is the net movement in mining stockpiles, ore in circuit and gold in safe
inventory.
Reconciliation of AISC per ounce sold:
31 December 2022 31 December 2021
Mine production costs (note 2.3) US$'000 408,543 368,327
Movement in inventory US$'000 (6,789) (15,081)
Royalties US$'000 23,842 21,672
Sustaining corporate administration costs US$'000 24,282 22,379
Rehabilitation costs US$'000 588 276
Sustaining underground development and exploration US$'000 40,743 48,641
Other sustaining capital expenditure US$'000 124,162 57,513
By‑product credit US$'000 (1,503) (1,361)
All‑in sustaining costs(1) US$'000 613,868 502,366
Gold sold - total (oz.) oz 438,638 407,252
AISC per ounce sold US$/oz 1,399 1,234
(1) Includes refinery and transport.
3) Cash and cash equivalents, bullion on hand and gold and silver sales debtor
Cash and cash equivalents, bullion on hand, gold and silver sales debtor is a
non-GAAP financial measure of the available cash and liquid assets at a point
in time. Management uses this measure internally to better assess performance
trends for the Company as a whole. Management considers that, in addition to
conventional measures prepared in accordance with GAAP, certain investors use
such non-GAAP information to evaluate the Company's performance and ability to
generate cash flow and the measure is intended to provide additional
information.
This non-GAAP measure does not have any standardised meaning prescribed by
GAAP and should not be considered in isolation or as a substitute for measures
of performance prepared in accordance with GAAP. This measure is not
necessarily indicative of cash and cash equivalents as determined under GAAP
and other companies may calculate it differently.
Reconciliation to cash and cash equivalents, bullion on hand, gold and silver
sales debtor:
31 December 2022 31 December 2021
US$'000
US$'000
Cash and cash equivalents (note 2.16(a)) 102,373 207,821
Bullion on hand (valued at the year-end spot price) 24,440 20,304
Gold and silver sales debtor (note 2.7) 29,832 29,147
Cash and cash equivalents, bullion on hand, gold and silver sales debtor 156,645 257,272
The majority of funds have been invested in international rolling short-term
interest money market deposits.
4) Free cash flow and adjusted free cash flow
Free cash flow is a non-GAAP financial measure. Free cash flow is a measure of
the available cash after distributions to the Non-Controlling Interest ("NCI")
in SGM, being EMRA, that the Group has at its disposal to use for capital
reinvestment and to distribute to shareholders of the parent. Free cash flow
is intended to provide additional information, does not have any standardised
meaning prescribed by GAAP and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with GAAP. This
measure is not necessarily indicative of operating profit or cash flow from
operations as determined under GAAP and other companies may calculate this
measure differently.
31 December 2022 31 December 2021
US$'000
US$'000
Net cash generated from operating activities 291,936 309,878
Less:
Net cash used in investing activities (274,583) (240,676)
Dividend paid - non-controlling interest in SGM (35,492) (75,200)
Free cash flow (18,139) (5,998)
Add back:
Transactions completed through specific available cash resources(1) - -
Adjusted free cash flow (18,139) (5,998)
(1) Adjustments made to free cash flow, for example acquisitions and
disposals of financial assets at fair value through profit or loss, which are
completed through specific allocated available cash reserves.
PRINCIPAL RISKS AND UNCERTAINTIES
RISK AND OPPORTUNITIES AS WE POSITION FOR GROWTH
Centamin recognises that nothing is without risk. We believe a successful and
sustainable business model requires a robust and proactive risk management
framework as its foundation. This is supported by a strong culture of risk
awareness, encouraging openness and integrity, alongside a clearly defined
appetite for risk. This enables the Company to consider risks and
opportunities for more effective decision-making, delivery on our objectives
and improve our performance as a responsible mining company.
The Board has overall responsibility, supported by the Audit and Risk
Committee, for establishing a framework that allows for the review of existing
and emerging risks in the context of both opportunities and potential threats
that informs the principal risks and uncertainties. These inform the
assessment of the future prospects and long-term viability of the Group,
further details of the approach are shown in the Viability Statement in the
2022 Annual Report. Risks and opportunities are also considered when
challenging the strategic objectives of the Company that underpin Our Strategy
as shown in the 2022 Annual Report.
Further information on our Risk Oversight and Accountability are shown on our
website under Risk & Opportunity Management in our About Section here
(https://www.centamin.com/about/risk-opportunity-management/) which also
contains further information on our Risk Appetite.
The Risk Management Framework and the system of internal controls are designed
to operate effectively together and report through to the Audit and Risk
Committee on a regular basis. Further detail of the work of the Audit and Risk
Committee is set out in the Audit and Risk Committee Report of the Governance
Report in the 2022 Annual Report.
The principal risks identified by the Board evidence the extent of potential
consequences inherent in operating a large-scale mining operation and we have
included our view on the appetite to these risks at a point in time at the end
of 2022, however it should be noted that these risks are discussed regularly,
and our appetite could change based on several factors. The Board regularly
assesses the measures to mitigate these risks.
The Directors confirm they have completed a robust assessment of the principal
and emerging risks facing the Company, including those which would negatively
impact its business model, future performance, operations, solvency or
liquidity.
PRINCIPAL RISKS
For the current reporting period we have identified 16 principal risks and 3
emerging risks. Further detail on the Principal Risks which could affect
Centamin are shown below with a description of the nature of the risk, risk
trend and velocity, link to the strategic pillars, mitigation measures,
ongoing strategy to manage the risk and the Group risk appetite.
Principal Risk Nature of Risk Mitigation Measures Ongoing Strategy
GEOPOLITICAL Future political, security and social changes in the countries in which we Government policies have developed over the past years in host countries to To maintain a detailed and up to date understanding of the investment
operate may impact on the Group. incentivise foreign direct investment and the development of local mining framework and operating conditions as well as a constructive relationship with
industries. Centamin deploys a proactive approach to government and all concerned stakeholders including host governments and local partners, such
The future investment framework, stability and business conditions in our stakeholder liaison and actively monitors - on an ongoing basis - legal, as EMRA.
Risk Appetite: Balanced operating locations could change with governments adopting different laws, fiscal, regulatory and political developments in its host countries.
regulations and policies that may impact on the ownership, development and
The Company seeks to abide by the Concession Agreement as well as local
operation of our Mineral Resources projects. For example, over the last year The terms of the Sukari Concession Agreement, (including the applicable tax laws/regulations in Egypt including around the areas of exploration and
the Company has adapted to the changing regional security in our development regime and rights of tenure), were issued and ratified under special Law No. furthermore where our exploration activities are taking place in Côte
projects in Côte d'Ivoire. We are monitoring these closely. Outside of our 222 of 1994 and can, therefore, only be amended by the passing of a further d'Ivoire.
host countries we are monitoring the ongoing conflict in Ukraine including the law. We continue to closely monitor the situation through our own security,
potential wider impact of this on the Company. This is discussed further in local and national government contacts, national security and external
the Chair's Foreward and in the Market Review in the 2022 Annual Report. advisors.
LEGAL AND REGULATORY COMPLIANCE The Group's structure includes mining exploitation and exploration licences in Centamin deploys a proactive approach to government and stakeholder liaison The Company seeks to ensure that it complies with all relevant regulation and
Egypt and Côte d'Ivoire held through companies in Australia, Jersey and the and actively monitors - on an ongoing basis - legal, fiscal, regulatory and legislation including its environmental and operational commitments set out in
United Kingdom. As a result, the Group is subject to various legal and political developments in its host countries. the relevant permits/authorisations and local laws/
regulatory requirements across all jurisdictions, including cross
Risk Appetite: Balanced jurisdictional taxation, related party transactions, antibribery and In Egypt we have the Sukari Concession Agreement which can only be changed by regulations.
corruption. means of another law, so we have the right to export gold, repatriation of
funds, existing tax exemption and further considerations.
Ongoing legal, fiscal and regulatory changes may impact project permitting,
tenure, taxation, exchange rates, environmental protection, labour relations, In addition, the Group engages with the relevant regulatory authorities. In
and the ability to repatriate income and capital. These measures may also addition, on an ongoing basis, the Group seeks appropriate advice to ensure
impact the ability to import key supplies, export gold production and compliance with all relevant regulation and legislation. An example would be
repatriate revenues. the global tax strategy in place which ensures all taxes are paid at an
operational level and further tax requirements are met through the holding
structure. Appropriate monitoring procedures are in place, and we ensure that
we manage legal and regulatory compliance.
LITIGATION Centamin's ability to operate and conduct its business may be adversely In order to mitigate this risk Centamin has (a) retained reputable legal To minimise exposure to litigation and reduce the impact of actions by
affected by current and any future dispute resolution and/or litigation advisers and continues to actively pursue its legal rights with respect to its complying with all relevant laws and regulations and to defend and/or bring
proceedings. Centamin is party to a single legal action in Egypt. The details existing case; and (b) maintains regular contact with its Egyptian legal any actions necessary to protect the Company's assets, rights and
of this litigation, which relates to the Sukari Concession Agreement, are advisers who actively monitor developments in both court and local media for reputation.
Risk Appetite: Balanced given in note 5.1 of the financial statements in the 2022 ARA. This challenge signs of any legislative or similar developments that relate to its ongoing
to the Sukari Concession Agreement could affect the Company's ability to litigation, or which may otherwise threaten its operations, finances or
operate the mine. prospects.
The potential for serious impact can be further mitigated by:
Centamin's adherence to local laws and agreements; the Egyptian government's
continued support on the constitutionality of Law No. 32 of 2014, which
restricts the ability of third parties to challenge contractual agreements
between the Egyptian government and investors such as Centamin; the investment
protections and dispute resolution provisions set out in the Sukari Concession
Agreement and the bilateral investment treaty between Australia (PGM's place
of incorporation) and the Arab Republic of Egypt.
On the 14th of January 2023 there was a ruling by the Egyptian Supreme
Constitutional Court which held that Law No. 32 of 2014 was constitutional.
The judgment gives Centamin the right to request the Supreme Administrative
Court to rule that the 2011 challenge to the Concession Agreement is now
legally inadmissible. Further detail is given in note 5.1 and on our website
(https://www.centamin.com/investors/regulatory-news/) in the regulatory news
section within the update issued on the 16 January.
GLOBAL MACROECONOMIC DEVELOPMENTS The COVID-19 pandemic meant economies across the world were negatively We monitor price movements and market dynamics using primarily third-party We will continue to allow for financial flexibility when budgeting and
impacted by lockdowns and disruptions to supply chains, which have been analysis and forecasts to support our financial projections and cash forecasting using a measured approach to the potential fluctuations in gold
further impacted by the crisis in the Ukraine and wider macroeconomic management strategies. Prices will continue to influence budget considerations price, inflationary pressures and the increasing costs across our capital
developments globally. Through 2021 and in to 2022, we saw increases in in areas such as exploration and the timing of certain capital expenditures. expenditure and operational needs.
Risk Appetite: Balanced operating costs and greater inflationary pressures, together with a shortage We focus on cost efficiencies and capital discipline to deliver competitive
of critical consumables and equipment. We expect this to continue during 2023 all-in sustaining cost.
as the new world normal is established. This situation could create an adverse
impact on our operations, costs, sales and profits. Deliver on our cost savings initiatives to counter inflation and improve
margins with the recent examples being the high productivity truck trays
Further information is shown in the Operational Review on and Market Review in alongside additional benefits from the delivery of the solar plant which
the 2022 Annual Report. reduces our fuel consumption and lowers the cost of buying fuel. Further
options being considered include Grid Connection, a Renewable Extension and
Electrifying our Mining Fleet outlined in Our 2030 Carbon Abatement Roadmap in
the 2022 Annual Report.
GOLD PRICE The extent of the Company's financial performance is due in part to the price The Group is 100% exposed to the gold price; however, the cash costs of the The Company does not currently hedge against the price of gold.
of gold, over which the Company has no influence. Revenues from gold sales are Sukari Gold Mine remain within our budget which is conservatively based on the
in US dollars and Centamin has exposure to costs in other currencies including long-term gold price as modelled by external advisors. This often means we can We will continue to allow for financial flexibility when budgeting and
Egyptian pounds, Australian dollars and sterling. take advantage of any changes in the gold price which have been positive over forecasting using a measured approach to the potential fluctuations in gold
Risk Appetite: Balanced
the course of 2022 with a realised average price of US$1794. price. This includes ensuring that we can manage within the boundaries and
Centamin manages its exposure to gold price by keeping operating costs as low
margins that the price of gold and the impacts to our cost base allow.
as possible and continues to consider other options where these would be
viewed as beneficial for our commitment to stakeholder returns.
CAPITAL ALLOCATION AND LIQUIDITY Centamin targets a capital structure to provide sufficient liquidity and We monitor price movements and market dynamics using primarily third-party We will continue to allow for financial flexibility when budgeting and
financial flexibility to meet the Company's current and future financial analysis and forecasts in order to support our financial projections and cash forecasting using a measured approach to the potential fluctuations in gold
commitments, while balancing that with sustainable stakeholder returns. management strategies. Prices will continue to influence budget considerations price, inflationary pressures and the increasing costs across our capital
in areas such as exploration and the timing of certain capital expenditures. expenditure and operational needs. This includes ensuring that we can manage
Risk Appetite: Balanced The capital requirements to develop Sukari, delivery of key projects, future We focus on cost efficiencies and capital discipline to deliver competitive within the boundaries and margins that the impacts to our cost base allow.
gold prices and operating costs are all factors which need to be considered all-in sustaining cost.
alongside the external pressures, as highlighted in the Global Macroeconomic
Distribution of free cash flow to stakeholders will continue to be managed in
Developments risk. Deliver on our cost savings initiatives to counter inflation and improve a balanced and sustainable manner that allows for both growth and returns.
margins with the recent examples being the high productivity truck trays
alongside additional benefits from the delivery of the solar plant which
reduces our fuel consumption and lowers the cost of buying fuel. Further
options being considered include Grid Connection, a Renewable Extension and
Electrifying our Mining Fleet outlined in Our 2030 Carbon Abatement Roadmap.
Further to this we have established increased levels of stores and inventory
which will be maintained in the short to medium term to reduce uncertainty.
We have a robust investment approval process involving the management and the
Board as required. Additional optionality will be generated through the RCF
which is now in place.
DIVERSIFICATION Sukari currently constitutes Centamin's main Mineral Resource and sole Mineral The project at Sukari has two distinct ore sources (open pit and underground), Outside the single project at Sukari, there is continued focus on longer term
Reserve, near term production and revenue. We recognise until further the processing plant has two separate flotation circuits, two separate power growth and expansion through our exploration and potential acquisition targets
production growth beyond the core Sukari asset is identified there is the stations and the commissioning of the solar plant in Q4 2022. both inside and outside of Egypt.
challenge of diversification.
Risk Appetite: Informed
Whilst one project, the nature of the design of the plant provides adequate The exploration projects across the business provide a well-balanced project
mitigation and reduces the relative likelihood of dependence compared to a pipeline, with potential to add incremental shareholder value by increasing
single layer plant design. The second circuit of the process plant has been production. Further information will be provided through 2023 in updates on
fully operational for over eight years, which shows resilience. In addition, the exploration activities and the release of the pre-feasibility study for
the plant is fed by both the open pit and underground operation, providing Doropo in H1.
higher and lower-grade ore.
Operational activity and production is expected to continue at above nameplate
capacity. Further to this we have increased our operational flexibility at
Sukari including an updated underground mining capacity.
Alongside the PFS on Doropo the wider resource base in Côte d'Ivoire is
growing at ABC, we are undertaking brownfield exploration around the Sukari
Concession and exploring highly prospective ground in Egypt's Eastern
Desert.
Further information is given in the Exploration Review in the 2022 Annual
Report.
CONCESSION GOVERNANCE AND MANAGEMENT SGM is 50:50 jointly owned by PGM (the Company's wholly owned subsidiary) and It is of key importance for Centamin to maintain a healthy and transparent A key objective of the Company is to maintain its licence to operate in its
EMRA, with equal board representation from both parties. The board of SGM working relationship with its 50% partner, EMRA, through a strict adherence to host countries. In Egypt, this is achieved through active and ongoing
operates by way of simple majority. Further to this with the award of the EDX the Sukari Concession Agreement. With the onset of profit sharing in 2019, the co-operation, regular meetings and correspondence with EMRA, as well as making
concession areas we need to adhere with the agreed terms. proper application of the cost recovery, net profit share payment provisions sure that the terms and conditions of the Concession Agreement and applicable
Risk Appetite: Balanced
and SGM protocols under the Concession Agreement, has become a priority. These laws are fully complied with including under the terms of the EDX concessions.
Should a dispute arise, or decision-making become deadlocked which cannot are key considerations as we work towards the renewal of the terms of the Ongoing monitoring and review of this is key and is an activity which we will
otherwise be amicably resolved then time-consuming and costly arbitration or existing Concession agreement. continue to give the required focus to.
other dispute resolution proceedings may need to be initiated.
It is a key focus to maintain good working relations with EMRA, other relevant
ministries and wider government to ensure successful operation of the Sukari
Gold Mine. The Group has regular meetings with officials from EMRA and invests
time in liaising with the relevant ministry and other governmental
representatives. This investment is shown by the wider commitment to Egypt
through the Sukari concession exploration and EDX concession investment.
LICENCE TO OPERATE Centamin is committed to building and operating our mines in a safe and Ensure that we are clear on the standards that are expected locally and Acting in an ethical, responsible and transparent manner is fundamental to
responsible manner. To do this, we seek to build trust-based partnerships with regionally within our areas of operation. realising the significant business benefits gained from building trusted and
host governments and local communities to protect our licence to operate and
constructive relationships with all our stakeholders, and to maintaining our
ability to grow. We should only advance our business interests where this Develop and implement investment plans that sustain broad stakeholder support socio-political licence to operate.
Risk Appetite: Balanced protects people, fosters socio-economic development and safeguards the and compliance with local and regional standards.
environment, and leaves a positive legacy
Strengthen our sustainability governance and management framework at all
Maintain an up-to-date compliance register for each asset and routinely review levels of the organisation, including reinforcement of our performance
for our host communities. our performance against these commitments and obligations. standards to support growth, supported by resources allocated to ensure the
long-term physical, chemical and biological stability of the site - or social
benefits to our host communities.
Further information is shown in Understanding Our Stakeholders in the 2022
Annual Report.
PEOPLE Our accomplishments as a Company rely on our ability to attract, develop and Initiatives which have been introduced include: the Employee Development To deliver on the principles and commitments as stated in our Code of Conduct.
(Attract, develop and retain skilled people) retain talented people as they are the foundation of our business. Pathway, to ensure all positions are undertaken to a proficient level; Visible leadership in the development of our people, diversity and inclusion.
supervisory and leadership training to equip employees for increased levels of Sustained resourcing of the professional development, training initiatives and
It is imperative that we support our people to develop a shared understanding technical and management responsibility; and succession planning. investment in our people.
of the critical behaviours and skills required for successful performance and
Risk Appetite: Balanced provide them with the opportunity to progress to more senior positions within Continue to reinforce awareness of our organisational values and the critical
the Company. Otherwise, we face the risk of elevated rates of turnover and behaviours required for successful performance supported by established
knowledge loss. policies and processes.
Valuing diversity and promoting inclusion is an ethical imperative for a Through visible leadership, strengthen diversity and inclusion in workplace
sustainable business. culture and practice, and set targets to increase the representation.
Further information is shown in Understanding Our Stakeholders in the 2022
Annual Report.
STAKEHOLDER ENVIRONMENTAL AND SOCIAL EXPECTATIONS Elevated expectations on environmental, social and governance ("ESG") Through our Sustainability Performance Framework we continue to strengthen our Our Environmental and Social Policies are supported at an operational level by
corporate responsibility, includes increased levels of stakeholder scrutiny, governance and management controls and assurance processes to meet stakeholder HSES Management Systems and tailored Environmental Management Plan that
disclosure, regulatory requirements and industry standards. expectations, existing and new regulatory and industry standards, for example considers the regulatory context of the country and unique environmental risks
the RGMPs, GISTM and TCFD. specific to each site.
Risk Appetite: Balanced Recent high-profile incidents have put a spotlight on the need for increased
levels of corporate accountability on matters of environmental and social We define environmental and social criteria and triggers to support key We employ a robust tailings governance approach based on good industry
governance, including tailings management, heritage protection, biodiversity, investment decisions. practice, risk management and assurance. We are targeting conformance with the
water management, responsible supply chains, diversity and inclusion.
GISTM by August 2023.
At asset-level, we have focused on building the capacity of our HSES
Whilst the COVID-19 pandemic initially focused attention, we have continued to specialist teams and the continual improvement of our environmental, We recognise that our operations can be a significant driver for positive
develop and invest in the wellbeing of our people, addressing social sustainability and social management system. We are updating our LOM socio-economic development. Fundamental to this success is the establishment
inequalities and the role which we must play in the wider communities. management plans and preparing for ISO 14001 accreditation. Further of trusting partnerships with our stakeholders, good governance, ethical
information is shown in Understanding Our Stakeholders in the 2022 Annual conduct and transparency.
Report.
Decarbonisation We recognise transition to a net zero carbon economy is expected to profoundly In the short-term, we are focused on the identification and delivery of We have set an interim climate target of 30%, to reduce our Scope 1 and 2 GHG
affect our business model over the medium and long-term due to factors projects that will effectively reduce our operational Scope 1 and 2 GHG emissions by 2030, compared to a 2021 base-year. This would put us on a
including: capital investment and access to new technology, the pricing of emissions. Paris-aligned trajectory to limit global warming to 'well below' 2°C by
carbon emissions; availability and costing of commodities and consumables;
2050.
Risk Appetite: Balanced changing market and investor sentiment. In 2022, we executed various carbon abatement projects, most notably our
36MWDC (30MWAC) solar plant and battery storage system. Other energy We have identified other carbon abatement opportunities that are the subject
The most significant opportunity for decarbonisation is the ability to reduce efficiency initiatives executed included roll-out of the high production trays of ongoing investigation, including the electrification of our mobile fleet
and potentially remove fossil fuel-generated electricity from gold mining's leading to an 8% reduction in fuel consumption per tonne of material moved, and energy efficiency. Under our climate transition strategy, we also
sources of power. optimisation of the fine grind process within the comminution circuit and recognise the need to collaborate with our supply chain to reduce Scope 3 GHG
replacement of older underground trucks and loaders to more efficient units. emissions.
The Transition Risk and Opportunity analysis on in the 2022 Annual Report
gives further detail. We also studied opportunities to reduce the operational emission of Sukari We will continue to assess our climate-related risks and opportunities against
over the Life of Mine, including sourcing clean and lower carbon power through the updated Life of Mine Plan for Sukari.
connection to the national grid and further expansion of our onsite renewable
energy production. Further information is given in our 2030 Decarbonisation Further information on our Climate Change Governance, Strategy, Risks, Metrics
Roadmap in the 2022 Annual Report. and Targets are given in our disclosures against the Task Force on
Climate-related Financial Disclosures in the 2022 Annual Report and our 2030
Decarbonisation Roadmap.
SAFETY, HEALTH AND WELLBEING It is an inherent risk in our industry that incidents due to unsafe acts or Protecting the safety, health and wellbeing of employees, contractors, local Ensuring the safety, health and wellbeing of our workforce is directly aligned
conditions, or the failure of our equipment or infrastructure could lead to communities and other stakeholders is a fundamental responsibility for with our first Value, to Protect,
injuries or fatalities. Remote and rostered work also has potential to impact Centamin. We seek continuous improvement of our safety and health management
the mental health and wellbeing of our workers. system and practices including assurance processes, with particular focus on and is a moral imperative. This requires a focus on zero-harm whilst
Risk Appetite: Controlled
the early identification of risks and the prevention of incidents. TSF2 is now constituting a direct investment in the
Our workforce faces potential risks from hazards such as fire, explosion and in operation and continues to be operated to the highest standards as outlined
electrocution, as well as risks specific to the mine site and development on our commitments and standards to the Tailings Storage Facility. productivity of the business and the physical integrity of our operations.
project. These include potential slope failures or collapse in the
underground, mobile plant collisions and incidents involving hazardous We continue to review and test our crisis management plan alongside A safe and healthy workforce translates into an engaged, motivated and
materials. Continuing focus on the risks associated with mining companies' reinforcing our critical risk and control standards. which includes building productive workforce that mitigates operational stoppages, and reduces
tailings facilities also means we continue to monitor this risk, completing the awareness and capacity of senior management teams to operationalise our potential incidents or harm.
regular internal and external technical reviews. critical risks standards and seek conformance to ISO 45001.
In 2022 we enhanced our health and wellbeing programmes with increased
awareness and training on mental health, as part of the delivery of our Health
& Wellbeing Plan, with new insights on the relationship between employer
and employee arising from the COVID-19 pandemic.
EXPLORATION AND PROJECT DEVELOPMENT Exploration activities by their very nature are highly speculative with an Before undertaking any exploration activities, a risk-based approach is Ensuring we have an effective and efficient exploration programme to meet our
inherent degree of risk. Centamin strives to make new discoveries, growth and undertaken to filter projects, considering a number of factors. strategic targets, long-term production and reserves goals. Further
value-creation opportunities through our exploration programme.
information will be provided through 2023 in updates on the exploration
There is now a restructured approach established with the refreshed activities and the release of the pre-feasibility study for Doropo.
Risk Appetite: Opportunistic Whilst Egypt continues to represent a significant opportunity through exploration team who undertake systematic work programmes which reduce the
brownfield exploration around the Sukari Concession and highly prospective risk and gradually increase the certainty of exploration discoveries that
ground in Egypt's Eastern Desert, we also recognise our potential growth allows a focused spending strategy. This will be supported by independent
projects in Côte d'Ivoire. Further information is given in the Exploration advice and an investment in technology.
Review in the 2022 Annual Report.
2022 delivered a positive update on the pre-feasibility study for Doropo with
completion planned for H1 2023, we secured 2,989km2 of highly prospective and
underexplored ground in Egypt which we started fieldwork on.
Further information is given in the Exploration Review.
MAXIMISING OUR GEOLOGICAL POTENTIAL Geological uncertainty is an inherent risk which all mining companies The Mineral Resource Management team is focused on developing the geological To achieve an accurate estimation based on geology, that informs improved mine
face. and structural framework in which mineralisation is hosted. This has brought planning and operations to deliver results. This will be supported by the
about a clear understanding of the structural and lithological controls on near-term roadmap to 475 - 500koz pa and the robust life of mine schedule
Understanding of the geology and associated grade distribution can be mineralisation and the development of a predictive model which is being used which was further updated in 2022.
Risk Appetite: Informed influenced by a number of factors which can impact the size, orientation and to expand the Mineral Resource and Reserve base of the Company.
shape of the ore and the potential grade expected by the mining operations.
Orebody stewardship was also introduced in which geology and the geologist is
As these estimations are used to inform our operations and the wider business at the forefront of all mining and extraction process decision-making. This
strategy we need to ensure that we can make this process as accurate as has allowed improved long and short-term planning, timing of grade control,
possible. material movement, blending and processing requirements to maximise return on
investment.
Further information on the improvements which have been made are shown in the
Exploration Review with one of the key areas being the growth of our Mineral
Reserves at Sukari, as highlighted in the Sukari Reserve and Resource update
released in Q4 2022.
OPERATIONAL PERFORMANCE AND PLANNING By their nature, mineral resources and reserves are estimates based on a range 2021 was a transformational year for Centamin with a focus on improving mining To achieve reliable and consistent production, whilst optimising the potential
of assumptions, including geological, flexibility and delivering growth which was continued through 2022 as we of the operation as highlighted in the Operational Review. The Company
delivered greater open pit mining flexibility and consistency alongside other provides timely and accurate information to the market on production levels
metallurgical, technical and economic factors. Other variables include improvements. and forecasts. The mining sector continues to face operating cost inflation,
Risk Appetite: Informed expected costs, inflation rates, gold price, grade
including labour costs, energy costs and the natural impact of ore-grade
We updated the market on the twelve-year LOM Plan, issued ten-year guidance, deterioration over time. In order to deliver our disciplined growth strategy
downgrades and production outputs. continued with accelerated waste-stripping and took ownership of the and to maintain and improve our competitive position, the Group must deliver
underground mining operation. Through 2022 we commissioned the solar plant, its financial improvement targets, cost savings initiatives and minimise the
Unplanned operational stoppages can impact our production. An inability to installed all the high production truck trays, lifted and boosted TSF2 and number of unplanned operational stoppages.
shift the volumes of waste required, drops in our operational capacity in refreshed the Sukari Orebody Stewardship Model. The LOM Plan should provide
mining, contractor management, supply chain disruption or ground stability are clarity as to the strategic direction of the mine and the desired production
examples of potential risks. levels for the short, medium and long-term to give focus to the operational
elements of the mine. Alongside the overhauled geological leadership team and
Accurate and complete planning is pivotal to informing production estimates, restructured approach to geology and orebody stewardship we have developed a
grade quality and provide greater clarity to corporate/operational comprehensive mining engineering model, enhanced our geotechnical engineering
decision-making. We then need to deliver against our targets by analysis of programme, increased our mining flexibility and have identified multiple
our data to inform the right decisions. initiatives to improve operating efficiency and productivity. An example being
taking ownership of the underground mining operation in house with targeted
investment in the resources required to reflect the growth potential.
EMERGING RISKS
Emerging risks are defined as circumstances or trends that could significantly
impact the Company's financial strength, competitive position or reputation
within the next three years or over a longer term. Emerging risks may prove
difficult to quantify as they are often influenced by external factors and
difficult to predict. Emerging risks are considered as part of the Company's
strategic discussions through all levels of the Group and a number of these
risks from the 2022 Annual Report have been elevated to a principal risk,
highlighting the importance of this process.
We have included 'Infectious Disease' as we recognise that there continues to
be the potential of a pandemic event or an even more localised outbreak which
could have significant impacts on our business, so we will continue to ensure
that we apply the lessons learned from COVID-19. We also recognise 'Climate
Change' as an emerging risk, whilst not currently a principal risk, as this
will potentially have external and longer-term impacts which need to be
considered.
The Audit and Risk Committee and Board regularly review the Principal Risks as
well as the wider operational, corporate and general business risks including
a discussion on emerging risks. We have outlined a non-exhaustive list of
Emerging Risks assessed during the year, these are risks which are inherent to
the nature of our business and where we operate. We monitor these as part of
the Risk Management Framework.
Cyber security The Company recognises the importance of risks associated with cyber security
and data governance but has assessed they do not represent a principal risk
given the current position of the Company's operations. Increasing investment
in this area is, however, a priority for the Company to ensure we can maintain
our resilience alongside planned enhancements to our technology as part of an
ongoing digital transformation programme.
Infectious Disease Potential of a regional/global outbreak of a new disease bringing medical,
economic and social challenges. We recognise the potential impacts of a global
pandemic similar to COVID-19 as a threat bringing potential risks to our
people and business. Learning from COVID-19 and other infectious disease
management we developed a dynamic action plan to safeguard the health of our
people and minimise any business impact. This will continue to adapt and
evolve as required to ensure we are in the best place to manage and respond as
required.
Climate Change Encompassing both physical and transitional elements, as this applies to our
growth and diversification prospects in Côte d'Ivoire and Egypt. Above and
beyond the scope of our existing operation, as presented in our Climate Change
disclosures in the 2022 Annual Report, climate change has the potential to
profoundly affect how we screen, evaluate and allocate capital towards growth
prospects.
Further details on transitional risk and mitigations are given under the
principal risk of 'Decarbonisation'.
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DIRECTORS' RESPONSIBILITIES
For the year ended 31 December 2022
STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE FINANCIAL
STATEMENTS
The Directors are responsible for preparing the financial statements in
accordance with applicable Jersey law and International Financial Reporting
Standards.
The Directors must not approve the financial statements unless they are
satisfied that they give a true and fair view of the state of affairs of the
Group and of the profit or loss of the Group for that period. In preparing the
financial statements, the Directors are responsible for:
· selecting suitable accounting policies and then applying them
consistently;
· stating whether applicable accounting standards have been
followed, subject to any material departures disclosed and explained in the
financial statements;
· making judgements and accounting estimates that are reasonable
and prudent; and
· preparing the financial statements on the going concern basis
unless it is inappropriate to presume that the Group will continue in
business.
The Directors confirm that they have complied with the above requirements in
preparing the financial statements.
The Directors are responsible for ensuring that the financial statements
comply with the Companies (Jersey) Law, 1991 and safeguarding the assets of
the Group and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities. So far as the Directors are
aware, there is no relevant audit information of which the Group's auditors
are unaware, and each director has taken all the steps that he or she ought to
have taken as a director in order to make himself or herself aware of any
relevant audit information and to establish that the Group's auditors are
aware of that information.
The Directors consider that the Annual Report and financial statements, taken
as a whole, are fair, balanced, and understandable and provides the
information necessary for shareholders to assess the Group's position and
performance, business model and strategy.
The Directors have undertaken a robust assessment of the principal and
emerging risks impacting the Company. The assessment identified strategic and
operational risks at a corporate level and principal risks impacting our
operations in Egypt and West Africa. Details of the risk assessment can be
found in the Audit and Risk Committee Report and the risk management and
principal risks section of the Strategic Report.
The Directors are also responsible for keeping adequate accounting records
that are sufficient to show and explain the Group's transactions and disclose
with reasonable accuracy at any time the financial position of the Group.
On behalf of the Board:
Martin Horgan Ross Jerrard
Chief Executive Officer Chief Financial Officer
Director Director
16 March 2023 16 March 2023
AUDITED FINANCIAL STATEMENTS
Consolidated statement of comprehensive income
for the year ended 31 December 2022
Note 31 December 2022 31 December 2021
US$'000 US$'000*
Revenue 2.2 788,424 733,306
Cost of sales 2.3 (544,075) (487,376)
Gross profit 244,349 245,930
Exploration and evaluation expenditure 2.1 (29,723) (13,879)
Other operating costs 2.3 (49,003) (48,427)
Other income 2.3 6,623 5,708
Finance income 2.3 1,214 196
Finance costs 2.3 (2,459) (673)
Impairment of exploration and evaluation asset 2.10 - (35,208)
Profit for the year before tax 171,001 153,647
Tax 2.5 (226) 20
Profit for the year after tax 170,775 153,667
Profit for the year after tax attributable to:
- the owners of the parent 72,490 101,527
- non-controlling interest in SGM 2.4 98,285 52,140
Total comprehensive income for the year 170,775 153,667
Total comprehensive income for the year attributable to:
- the owners of the parent 72,490 101,527
- non-controlling interest in SGM 2.4 98,285 52,140
Earnings per share attributable to owners of the parent:
Basic (US cents per share) 6.4 6.287 8.811
Diluted (US cents per share) 6.4 6.203 8.738
*In the 2021 Consolidated Statement of Comprehensive Income, Finance costs
were included and disclosed in the line 'Other operating costs', in these
financial statements they are now separately disclosed in their own line and
as such 'Other operating costs' for 2021 have changed.
The above audited consolidated statement of comprehensive income should be
read in conjunction with the accompanying notes.
Consolidated statement of financial position
as at 31 December 2022
Note 31 December 2022 31 December 2021
US$'000 US$'000
Non-current assets
Property, plant and equipment 2.9 1,086,649 956,217
Exploration and evaluation asset 2.10 24,809 25,261
Inventories 2.11 94,773 64,756
Other receivables 2.7 1,372 101
Total non-current assets 1,207,603 1,046,335
Current assets
Inventories 2.11 134,065 128,721
Trade and other receivables 2.7 35,628 32,579
Prepayments 2.8 13,864 7,964
Cash and cash equivalents 2.16(a) 102,373 207,821
Total current assets 285,930 377,085
Total assets 1,493,533 1,423,420
Non-current liabilities
Other payables 2.12 11,801 10,386
Provisions 2.13 37,425 42,647
Total non-current liabilities 49,226 53,033
Current liabilities
Trade and other payables 2.12 99,395 75,759
Tax liabilities 2.5 249 253
Provisions 2.13 3,256 4,617
Total current liabilities 102,900 80,629
Total liabilities 152,126 133,662
Net assets 1,341,407 1,289,758
Equity
Issued capital 2.14 670,994 669,531
Share option reserve 2.15 6,082 4,975
Accumulated profits 641,794 655,508
Total equity attributable to:
- owners of the parent 1,318,870 1,330,014
- non-controlling interest in SGM 2.4 22,537 (40,256)
Total equity 1,341,407 1,289,758
The above audited consolidated statement of financial position should be read
in conjunction with the accompanying notes.
The audited consolidated financial statements were authorised by the Board of
Directors for issue on 16 March 2023 and signed on its behalf by:
Martin Horgan Ross Jerrard
Chief Executive Officer Chief Financial Officer
Director Director
16 March 2023 16 March 2023
Consolidated statement of changes in equity
for the year ended 31 December 2022
Note Issued Share Accumulated Total Non-controlling Total
capital option profits US$'000 interests equity
US$'000 reserve US$'000 US$'000 US$'000
US$'000
Balance as at 1 January 2022 669,531 4,975 655,508 1,330,014 (40,256) 1,289,758
Profit for the year after tax - - 72,490 72,490 98,285 170,775
Total comprehensive income for the year - - 72,490 72,490 98,285 170,775
Net recognition of share-based payments 2.15 - 2,570 - 2,570 - 2,570
Transfer of share-based payments 2.15 1,463 (1,463) - - - -
Dividend paid - non-controlling interest in SGM 2.4 - - - - (35,492) (35,492)
Dividend paid - owners of the parent - - (86,204) (86,204) - (86,204)
Balance as at 31 December 2022 670,994 6,082 641,794 1,318,870 22,537 1,341,407
Note Issued Share Accumulated Total Non-controlling Total
capital option profits US$'000 interests equity
US$'000 reserve US$'000 US$'000 US$'000
US$'000
Balance as at 1 January 2021 668,807 3,343 634,498 1,306,648 (17,196) 1,289,452
Profit for the year after tax - - 101,527 101,527 52,140 153,667
Total comprehensive income for the year - - 101,527 101,527 52,140 153,667
Own shares acquired 2.14 (1,391) - - (1,391) - (1,391)
Net recognition of share-based payments 2.15 - 3,747 - 3,747 - 3,747
Transfer of share-based payments 2.15 2,115 (2,115) - - - -
Dividend paid - non-controlling interest in SGM 2.4 - - - - (75,200) (75,200)
Dividend paid - owners of the parent - - (80,517) (80,517) - (80,517)
Balance as at 31 December 2021 669,531 4,975 655,508 1,330,014 (40,256) 1,289,758
The above audited consolidated statement of changes in equity should be read
in conjunction with the accompanying notes.
Consolidated statement of cash flows
for the year ended 31 December 2022
Note 31 December 2022 31 December 2021
US$'000 US$'000
Cash flows from operating activities
Cash generated from operating activities 2.16(b) 292,166 309,873
Income tax (paid)/received (230) 5
Net cash generated from operating activities 291,936 309,878
Cash flows from investing activities
Acquisition of property, plant, and equipment (263,622) (224,929)
Brownfield exploration and evaluation expenditure (12,175) (15,943)
Finance income 2.3 1,214 196
Net cash used in investing activities (274,583) (240,676)
Cash flows from financing activities
Cash element of share-based payments (523) -
Own shares acquired - (1,391)
Dividend paid - non-controlling interest in SGM 2.4 (35,492) (75,200)
Dividend paid - owners of the parent 3.2.2 (86,204) (80,517)
Net cash used in financing activities (122,219) (157,108)
Net decrease in cash and cash equivalents (104,866) (87,906)
Cash and cash equivalents at the beginning of the year 207,821 291,281
Effect of foreign exchange rate changes (582) 4,446
Cash and cash equivalents at the end of the year 2.16(a) 102,373 207,821
The above audited consolidated statement of cash flows should be read in
conjunction with the accompanying notes.
Notes to the consolidated financial statements
for the year ended 31 December 2022
BASIS OF PREPARATION
These financial statements are denominated in US dollars ("US$"), which is the
presentation currency of Centamin plc. All companies in the Group use the US$
as their functional currency. All financial statements presented in US$ have
been rounded to the nearest thousand dollars, unless otherwise stated.
These financial statements have been prepared in accordance with the
International Financial Reporting Standards ("IFRS") as adopted by the
European Union ("EU") and interpretations issued from time to time by the IFRS
Interpretations Committee ("IFRS IC") and which are mandatory for reporting as
at 31 December 2022 and the Companies (Jersey) Law 1991. The Group has not
early adopted any other amendments, standards or interpretations that have
been issued but are not yet mandatory or effective.
The consolidated financial statements have been prepared on a going concern
basis and under the historical cost convention, as modified by financial
assets and financial liabilities (including derivative) instruments which are
measured at fair value.
The consolidated financial statements for the year ended 31 December 2022 were
authorised by the Board of Directors of the Company for issue on 16 March
2023.
GOING CONCERN
Under guidelines set out by the FRC, the directors of UK listed companies are
required to consider whether the going concern basis is the appropriate basis
of preparation of consolidated financial statements, under the historical cost
convention, as modified by financial assets and financial liabilities
(including derivative) instruments which are measured at fair value.
The FRC has released updated guidelines regarding disclosure of 'material
uncertainties' related to going concern in current circumstances. Material
uncertainties refers to uncertainties related to events or conditions that may
cast significant doubt upon the entity's ability to continue as a going
concern. In other words, if boards identify possible events or scenarios
(other than those with a remote possibility of occurring) that could lead to
corporate failure, then these should be disclosed. When assessing whether
material uncertainties exist, boards should consider both the uncertainty and
the likely success of any realistically possible response to mitigate this
uncertainty.
Management has performed detailed analyses and forecasts to assess the
economic impact of various downside scenarios from a going concern and
viability perspective. The Group continues to benefit from a strong balance
sheet with large cash balances and no debt. At 31 December 2022 the Group had
cash and cash equivalents of US$102 million. As part of assessing the Group's
ability to continue as a going concern, management performed various downside
stress testing scenarios to assess the impact on liquidity headroom. The
scenarios were considered without applying any mitigating actions over a
period of at least twelve months from 16 March 2023, examples of such
mitigating actions which were not applied would be drawdowns of the US$150
million Revolving Credit Facility which was available as of 13 March 2023.
Key assumptions underpinning this forecast include:
· Available cash balances;
· Favourable litigation outcomes, for current litigation refer to
note 5.1 to the financial statements;
· A fuel price of US$0.90/litre;
· A processing plant recovery rate of 88.2%
· Gold price of at least US$1,600/oz.; and
· Production volumes in line with 2023 guidance
· The scenarios and impact on liquidity is as follows:
· Base case: No change to parameters, expected closing cash balance
of US$52 million;
· Average gold price reduction to US$1,475 per ounce: resulted in a
closing cash balance of US$6 million;
· Fuel price increase to US$1.25/litre: resulted in a closing cash
balance of US$9 million;
· Processing capacity reduction by 20%: resulted in a closing cash
balance of US$10 million; and
· Processing plant recovery rate reduction to 85.0%: resulted in a
closing cash balance of US$37 million.
The sensitivities applied were informed by internal and external data sources,
including a review of the Group's most recent production levels with
reductions or increases of various levels to various stages of slowdown, or
metal content. The Group doesn't engage in any hedging activities and as such
all gold sales are exposed to movements in market prices. In each scenario,
sufficient liquidity was maintained without applying mitigating measures.
The above sensitivity analysis was also used to assess each scenarios' outcome
as a short-term impairment trigger necessitating a need for a full impairment
assessment review for the Sukari operating assets as at the reporting date.
All the various outcomes assessed did not reflect an adverse position that
would be indicative of a potential impairment rigger for the Sukari operating
assets.
Based on a detailed cash flow forecast prepared by management, and the various
downside scenarios, the Directors have a reasonable expectation that the Group
will have adequate resources to continue in operational existence for twelve
months from 16 March 2023 and that currently there are no material
uncertainties regarding going concern.
These financial statements for the year ended 31 December 2022 have therefore
been prepared on a going concern basis, which contemplate the realisation of
assets and liquidation of liabilities during the normal course of operations,
in preparing these financial statements.
In preparing the financial statements, we have considered the potential impact
of climate-related physical and transition risks, in the context of the
disclosures included in the Strategic Report. Based on this assessment,
climate-related risk is not assessed to have a material financial impact on
the viability of the business at the current time primarily due to the short
remaining life of mine for Sukari.
ACCOUNTING POLICIES
Accounting policies are selected and applied in a manner which ensures that
the resulting financial statements satisfy the concepts of relevance and
reliability, thereby ensuring that the substance of the underlying
transactions or other events is reported. These policies have been
consistently applied to all the years presented, unless otherwise stated.
1. CURRENT REPORTING PERIOD AMENDMENTS
1.1 CHANGES IN CRITICAL JUDGEMENTS AND ESTIMATES
There were no material updates and/or changes to critical accounting
judgements and estimates that management has made in the year in applying the
Group's accounting policies that have a significant effect on the amounts
recognised and the related disclosures in the financial statements.
1.2 CHANGES IN POLICIES AND ESTIMATES
Certain new accounting standards, amendments to accounting standards and
interpretations have been published that are not mandatory for 31 December
2022 reporting periods and have not been early adopted by the Group.
New or amended accounting standards
The amendments to accounting standards that are effective for annual periods
beginning on 1 January 2022 did not have a significant impact on the Group's
results year and are also not expected to have a significant impact in future
reporting periods and on foreseeable future transactions.
Further details of new or revised accounting standards, interpretations or
amendments which are effective for the periods beginning on or after 1 January
2022 and their impact on the Group are listed below:
Accounting standard Requirement Impact on financial statements
Amendment to IAS 16 'Property, Plant and Equipment': proceeds before intended The amendment to IAS 16 'Property, Plant and Equipment' ("PP&E") prohibits No material change to the Group's financial position or performance.
use. an entity from deducting from the cost of an item of PP&E any proceeds
received from selling items produced while the entity is preparing the asset
for its intended use. It also clarifies that an entity is 'testing whether the
asset is functioning properly' when it assesses the technical and physical
performance of the asset. The financial performance of the asset is not
relevant to this assessment.
Amendments to IAS 37 'Provisions, Contingent Liabilities and Contingent The amendment of ISA 37 clarifies that the direct costs of fulfilling a No material change to the Group's financial position or performance.
Assets': Onerous Contracts - Cost of Fulfilling a Contract. contract include both the incremental costs of fulfilling the contract and
allocation of other costs directly related to fulfilling contracts. Before
recognising a separate provision for an onerous contract, the entity
recognises any impairment loss that has occurred on assets used in fulfilling
the contract.
Annual improvements to IFRS Standards 2018 - 2020. The following improvements we finalised in May 2020: No material change to the Group's financial position or performance.
· IFRS 9 'Financial Instruments' - clarifies which fees should be
included in the 10% test for derecognition of financial liabilities.
· IFRS 16 'Leases' - amendment of illustrative example 13 to remove the
illustration of payments from the lessor relating to leasehold improvements,
to remove any confusion about the treatment of lease incentives.
Amendments to IFRS 3 'Business Combinations' - Reference to the Conceptual Minor amendments were made to IFRS 3 'Business Combinations' to update the No material change to the Group's financial position or performance.
Framework. references to the Conceptual Framework for Financial Reporting and add an
exception for the recognition of liabilities and contingent liabilities within
the scope of IAS 37 'Provisions, Contingent Liabilities and Contingent
Assets'and Interpretation 21 'Levies'. The amendments also confirm that
contingent assets should not be recognised at the acquisition date.
For a detailed discussion about the Group's performance and financial
position, please refer to the financial review.
1.3 CRITICAL JUDGEMENTS AND ESTIMATES IN APPLYING THE ENTITY'S ACCOUNTING
POLICIES
The following are the critical judgements and estimates that management has
made in the process of applying the Group's accounting policies and that have
the most significant effect on the amounts recognised in the financial
statements.
Management has discussed its critical accounting judgements and estimates and
associated disclosures with the Company's Audit and Risk Committee.
The critical accounting judgements are as follows:
1.3.1 JUDGEMENT: CONTROL
1.3.1.1 Judgement: Accounting treatment of the Sukari Gold Mining Company
("SGM")
Pharaoh Gold Mines NL (the holder of an Egyptian branch) ("PGM") and EMRA are
50:50 partners in SGM. However, SGM is fully consolidated within the Group as
if it were a subsidiary due to it being a controlled entity, reflecting the
substance and economic reality of the Concession Agreement ("CA") (see note
4.1 and note 4.2 to the financial statements).
IFRS 10 'Consolidated financial statements' defines control as encompassing
three distinct principles, which, if present, identify the existence of
control by an investor over an investee, hence forming a parent-subsidiary
relationship. The principles are:
1. power over the investee;
2. exposure, or rights, to variable returns from its involvement with the
investee; and
3. the ability to use its power over the investee to affect the amount of the
investor's returns.
An investor has power over an investee when the investor has existing rights
that give it the current ability to direct the relevant activities (i.e., the
activities that significantly affect the investee's returns).
The Company's control of SGM, through PGM
PGM is a 100% owned subsidiary of the Company. The Company, through PGM, has
the right to appoint or remove the managing director of SGM under the terms of
the CA and in doing so controls the activities in relation to the operation of
SGM that most significantly affect the returns of SGM. These are all
illustrated in the sections that follow:
a) The duties of PGM
o PGM controls the appointment of the General Manager ("GM") at the Sukari
Gold Mine;
o By controlling the appointment of the GM and directing their activities,
the GM will make all day-to-day decisions to allow the mine to operate in a
manner that aligns with the Company's objectives which involve:
o preparing SGM's work programmes through determination of the daily and
longer-term mine plans, the budgets covering the operations to be carried out
throughout the life of the mine ("LOM") and approval of the same;
o managing capital expenditure, procurement, cost control and treasury;
o conducting exploration, development, production, and marketing operations;
o co-ordinating SGM operations and activities, including its dealings with
all contractors and subcontractors;
o bearing ultimate responsibility for all costs and expenses required in
carrying out any and all operations under the CA;
o funding the operations of SGM and recovering costs and expenses throughout
the LOM (i.e., exploration, development, and production phases);
o funding additional exploration and expansion programmes within the mine
during the production phase;
o taking custody of SGM's stock and management of its funds;
o selling and shipping of all gold and associated metals produced; and
o entering into and managing gold sales or hedging contracts and forward
sale agreements
b) The duties of EMRA
· EMRA must, under the terms of the CA, provide the required
approvals to allow the mine to operate.
c) The duties, role, and function of the board of SGM:
· The board of SGM has six board members:
o three of which are appointed by the Company, through PGM; and
o three of which are appointed by EMRA:
§ the executive chairman, as one of the three EMRA appointed board members,
is a representative of EMRA and is appointed by the Egyptian Ministry of
Finance.
· The board of SGM convenes twice a year to:
o facilitate a forum for sharing information between the owners of SGM;
o provide a mechanism to scrutinise the timing and amounts of expenses;
rather than as a decision-making body over SGM's most significant relevant
activities;
o consider, review, and approve all the following in relation to SGM:
§ the budget;
§ the annual financial statements;
§ the cost recovery position; and
§ other compliance matters.
o The board of SGM is not allowed to unreasonably withhold approval of any
of the above.
· If there is a disputed matter or deadlock position at an SGM
board level, it is resolved as follows:
o through open discussion at board level;
o the executive chairman does not have a veto or casting vote;
o where matters cannot be agreed upon, an ad-hoc committee is appointed with
each party having equal representation. This committee will then recommend an
appropriate course of action to the board with the best interest of all
shareholders in mind; and
o should the board still not agree on a course of action, there is a
provision for arbitration and ultimately matters can be presented to the
International Court of Arbitration at The Hague.
· the board of SGM cannot appoint or remove the GM, this right
belongs solely to the Company, through PGM, under the terms of the CA;
EMRA and/or the Egyptian government have no downside risk in their share of
SGM. If SGM were to become loss making or insolvent, these costs are absorbed
in its entirety by the Company, through PGM, in accordance with the CA.
The Company, through PGM, is therefore exposed to the variable returns of SGM,
has the ability to affect the amount of those returns, has power over SGM
through its ability to direct its relevant activities and therefore meets all
the criteria of control to consolidate SGM's results within the Group to
reflect the substance and economic reality of the CA.
As the Company, through PGM, is determined to be the controlling party,
it should consolidate SGM, and should apply consolidation procedures,
combining balance sheet and profit and loss items line by line as well
as applying the rest of the consolidation procedures set out in IFRS 10 App B
para B86. The Group therefore prepares consolidated financial statements on
this basis.
1.3.1.2 Judgement: Treatment and disclosure of EMRA profit share
EMRA holds 50% of the shares in the Group controlled entity, SGM, which are
not attributable to the Company, and it is entitled to receive net proceeds
from the operations of SGM on a residual basis in accordance with their
specified shareholding per the CA (this distribution is in accordance with the
profit share mechanism and not as a consequence of accumulated profits as
defined by accounting standards). Therefore, the Group recognises a
Non-Controlling Interest ("NCI") in SGM to represent EMRA's participation.
In terms of the CA, the NCI's rights to any profit share payments (dividend
distributions) is only triggered after the cost recovery of all amounts
invested (or spent during operations) during the exploration, construction and
development stages have been repaid to PGM. The profit share mechanism was
only triggered in November 2016 (after all amounts due to be cost recovered
were complete). Until that time the NCI had no rights to claim any
distribution of accumulated profits or profit share.
It is important to note that the availability of cash in SGM for distribution
to its shareholders as profit share is under the control of the Company,
through PGM, by the decisions made on SGM's strategic direction and day-to-day
operational requirements of running the mine. This is regarded as
discretionary and exposes the Company to variable returns.
Distributions to shareholders in SGM:
· once all expenditure requirements, including current cost
recovery payments due, have been met, excess cash reserves, if any, are
distributed to both SGM shareholders:
o distributions are always made simultaneously to both shareholders;
o the split of the distribution is in accordance with the ratchet mechanism
(i.e. the standard profit share ratios of 60/40 (first two years from 1 July
2016), 55/45 (second two years from 1 July 2018) and 50/50 (from 1 July 2020)
to PGM and EMRA respectively through time) as governed by the CA; but:
§ distributions are not mandatory, entirely discretionary and there are
only distributions if there are excess funds;
§ distributions are paid in advance on a weekly or fortnightly basis by
mutual agreement between shareholders;
· at the end of the SGM reporting period, final profits are
determined, externally audited, and then approved by the SGM board:
o final profit distributions become payable within 60 days of the financial
year end, SGM is unable to avoid payment at this point and the amount payable
is recorded as equity attributable to the NCI until paid;
· the CA is merely a shareholder agreement specifying how and when
profits from SGM will be distributed to shareholders and is typical of a
minority shareholder protection mechanism
The Group should attribute the profit or loss for the year after tax and each
component of other comprehensive income for the year to the owners of the
parent and to the NCI in SGM. The entity shall also attribute total
comprehensive income for the year to the owners of the parent and to NCI even
if this results in the NCI having a deficit balance (IFRS 10 App B para B94).
The CA only contemplates the distribution of profit to shareholders.
The NCI would only have a deficit balance where advance distributions paid
during the year have exceeded final distributions payable after year-end
financial statements have been prepared and audited. This deficit would be
entirely funded by the Company, through PGM, and would first be redeemed from
future excess cash before regular distributions to both parties resume. SGM
has no claw back provision for advance profits paid to the NCI. We note that
annual dividend payments, after approval of audited financial statements, is a
standard feature of transactions with an NCI and that such payments are not
normally treated as non‑discretionary payments triggering a liability in
the consolidated statement of financial position of the parent.
Any losses generated by SGM will be entirely funded by the Company, through
PGM, but attributed to both shareholders. These losses will first be recovered
before further profit share distributions commence.
In the Group statement of financial position, all the accumulated profits of
SGM are attributable to the Company as EMRA have already received their share
through the advance profit distribution payments made, therefore NCI is
usually disclosed in the financial statements as nil unless there is an
outstanding distribution payable to or deficit from EMRA due to timing
differences of the cash sweep. Please refer to note 2.4 for further
information.
1.3.2 JUDGEMENT: IMPAIRMENT TRIGGER ASSESSMENT - SUKARI
IFRS requires management to test for impairment if events or changes in
circumstances indicate that the carrying amount of a finite life asset may not
be recoverable. Considering the requirements of IAS 36 Impairment of Assets,
an impairment trigger assessment has been performed.
Group operating assets
As part of the impairment trigger assessment, management has also considered
movements in the key assumptions which have historically been used in
impairment assessments and is satisfied that there have not been any changes
that would constitute an impairment trigger.
These include changes to:
· forecast gold prices, considering current and historical prices,
price trends and related factors;
· discount rates;
· operating performance which includes production and sales volumes;
· exploration potential and reserves and resources report;
· operating costs, taking into consideration the impact of the solar
plant on those costs and emissions targets;
· recovery rates; and significant changes to the mine plan with an
impact on the mine's cost of mineral extraction
On review, no impairment triggers were identified.
Consideration of climate change risks
In preparing the financial statements, the Directors have considered the
potential impact of climate-related physical and transitional risks for the
Group operating assets, in the context of the TCFD disclosures. The Directors
recognise that climate-related risks have potential to impact the carrying
value of assets through its effects on future cash flow projections and
impairments on the useful life of assets. The financial statement also
considers the opportunities arising from our transition to a low carbon future
and achievement of our target for reducing GHG emissions.
In particular, the Directors have qualitatively assessed the financial and
strategic viability of the business to the likely impact of climate-related
risk in respect of the following areas:
· Going concern and viability of the Group over the short-term, arising
from market and investor uncertainty
· Cash flow forecasts considering increased price forecasts for
commodities and consumables
· Effects on property, plant and equipment, arising from carbon pricing
and the adoption/deployment of low carbon technology
· Capital expenditure over the short and medium term, arising from the
adoption/deployment of low carbon technology
The Directors have made judgements and assumptions using available internal
and external information to assess the impact of climate-related risks on the
future cash flows and operations of the business. The Directors are aware of
the uncertainty around how climate-related transition risks will affect global
and national economies over the medium and longer term, and more specifically:
gold price, carbon pricing, other regulatory mechanisms and the availability
of low carbon technology of relevance to our operations. In 2023, we will
undertake a more detailed analysis of climate-related scenarios aligned to the
Intergovernmental Panel on Climate Change ("IPCC") and review the impact of
these transition risks on business strategy and financial performance over the
life of our assets. Centamin will monitor and routinely test climate-related
risk against judgements and estimates made in preparation of the Group's
financial statements.
Based on the considerations of climate-related transition risk in the
short-term, no factors are expected to have a material impact on the carrying
values of assets or liability of the Group in the next financial year. Capital
expenditure to support our target for GHG emissions reduction is assessed to
be financially material in the short term, however the technology is
commercially available and the expenditure is value accretive. At Sukari, our
planned extension to solar plant and grid connection are forecast to provide a
positive return on investment within the life of asset.
We have assessed the physical risks to our operations under future emissions
scenarios. Our business was assessed to be resilient to physical risks for the
near-term predictions indicating that adaptation specifically to mitigate the
effects of climate change is not required for the operational life of Sukari.
The useful life of the Sukari asset is not expected to be reduced by
climate-related physical risks.
1.3.3 JUDGEMENT: LITIGATION
The Group exercises judgement in measuring and recognising provisions and the
exposure to contingent liabilities related to pending litigation, (see note
5.1 to the financial statements). Judgement is necessary in assessing the
likelihood that a pending claim will succeed, or a liability will arise, and
to quantify the possible range of any financial settlement.
The Group is party to a significant legal action in Egypt, which could
potentially adversely affect its profitability and affect its ability to
operate the mine at Sukari in the manner in which it is currently operated.
The details of this litigation, which relate to the Concession Agreement under
which Sukari operates, and the latest developments, are provided in note 5.1
to the financial statements.
With respect to the Administrative Court ruling in the Concession Agreement
case (discussed in note 5.1 below), on 20 March 2013 the Supreme
Administrative Court upheld the Company's application to suspend this decision
until the merits of the Company's appeal are considered and ruled on, thus
providing assurance that normal operations will be able to continue during
this process. In 2016, the Company's appeal was indefinitely stayed by the
Supreme Administrative Court, pending judgment in a separate case currently
before the Supreme Constitutional Court, the outcome of which affects the
Concession Agreement case. The Supreme Constitutional Court has now given a
favourable judgment in that case, as a result of which an application has been
made to resume proceedings in the original appeal (which is a purely
procedural matter). The Group's Egyptian lawyers will then make an application
to the Supreme Administrative Court to have the original case dismissed and
the judgment cancelled. Further details are provided in note 5.1 below.
In the unlikely event that the Group is unsuccessful in this action and the
operating activities are restricted to a reduced area, it is management's
belief that the Group would be able to continue as a going concern. The Group
is in regular contact with its Egyptian lawyers, who are monitoring
developments on a day-to-day basis, and is therefore able to react swiftly if
action is required.
The changes to critical accounting estimates and assumptions are disclosed in
notes 1.2 and 1.3 above. The other critical estimates and assumptions are as
follows:
1.3.4 ESTIMATE: MINERAL RESERVE AND RESOURCE STATEMENT IMPACT ON ORE RESERVES
Ore reserves and mineral resource estimates are estimates of the amount of ore
that can be economically and legally extracted from the Group's mining
properties. The Group Mineral Reserve and Resource statement for SGM with an
effective date of 30 June 2022 is contained in the supplementary section of
the 2022 Annual Report. The information on the Mineral Resources and Reserves
statement was prepared by Qualified Persons as defined by the National
Instrument 43-101 of the Canadian Securities Administrators.
There are numerous uncertainties inherent in estimating Mineral Resources and
Mineral Reserves. Assumptions that are valid at the time of estimation may
change significantly when new information becomes available. Estimates of
recoverable quantities of reserves include assumptions on commodity prices,
exchange rates, discount rates and production costs for future cash flows. It
also involves assessment and judgement of complex geological models. The
economic, geological, and technical factors used to estimate ore reserves may
change from period to period.
Ore reserves are integral to the recognised amounts of depreciation and
amortisation and the valuation of inventory because of the unit of production
("UOP") amortisation method. Therefore, ore reserves and mineral resource
estimates and changes to these may impact the Group's reported financial
position and results in the following way:
· The carrying value of mine development properties, which
incorporates the rehabilitation obligation assets may be affected due to
changes in estimated future cash flows. The recoverable amount of mine
development properties is directly linked to the quantities of the
economically recoverable reserves of the mine and therefore with other factors
held constant, a significant decrease in the reserves might result in an
impairment loss on the asset and have a negative impact on the carrying
values;
· Capitalised stripping costs recognised in the statement of financial
position, as either part of mine development properties or inventory or
charged to profit or loss, may change due to changes in stripping ratios;
· Depreciation and amortisation charges in the statement of profit
or loss and other comprehensive income may change where such charges are
determined using the UOP, or where the useful life of the related assets
change. The Group's mine development properties asset category, incorporating
the deferred stripping asset and rehabilitation obligation assets is amortised
using the UOP method; and
· Provisions for rehabilitation and environmental provisions may
change where reserve estimate changes affect expectations about when such
activities will occur and the associated cost of these activities.
Production forecasts from the underground mine at Sukari are partly based on
estimates regarding future resource and reserve growth. It should be
specifically noted that the potential quantity and grade from the Sukari
underground mine is conceptual in nature and that it is uncertain if
exploration will result in further targets being delineated as a mineral
resource. Please refer to the Mineral Reserve and Resource statement impact on
ore reserves sensitivity, note 3.1.1(h).
1.3.5 ESTIMATE: LONG-TERM GOLD PRICE USED IN THE NON-CURRENT STOCKPILES NET
REALISABLE VALUE ("NRV") ASSESSMENT
All inventories are stated at the lower of cost and net realisable value.
Management and Directors believe that the estimates used regarding long-term
gold prices in the non-current stockpiles NRV assessment are critical
estimates and are realistic based on current information. Please refer to
inventories, note 2.11.
1.3.6 ESTIMATE: RESTORATION AND REHABILITATION PROVISION UNIT RATES
The Sukari's life of asset review was completed in Q4 of 2021 and announced to
the market on 8 December 2021. After completion of the life of asset review,
work commenced on the full review of the restoration and rehabilitation plan
for Sukari to determine the Company's obligation as at 31 December 2022. This
work, which involved an external third party to verify the assumptions and
methodology used in the restoration and rehabilitation plan, has been
completed. On the financial side, the restoration and rehabilitation plan and
provision assessment resulted in a decrease of the provision by US$5.8 million
(2021: US$ 21.9 million increase) to US$37 million as at 31 December 2022, see
note 2.13.
The US$5.8 million decrease in the provision was mainly due to an increase in
the discount rate to 3.63% in 2022 from 1.38% in 2021 and decrease in the
inflation rate to 2.37% in 2022 from 2.50% in 2021. The cost base before
discounting however increased by a net amount of US$4.7 million. The key
drivers for the cost base increase were mainly due to the following
significant changes:
· TSF1 - A US$1 million increase (2021 $9 million increase) in the
cost of loading and hauling waste rock to create a two-metre cover over the
tailings surface;
· TSF2 - the TSF usable area is significantly bigger in 2022 compared
to 2021 as construction work of certain stages was completed. There is US$3
million decrease (2021: $5 million increase) in the cost of loading and
hauling and spreading the waste rock to create a two-metre cover over the
tailings surface. The 2022 cost base is determined using the actual surface
area of the tailings dam as at year end compared to the surface area of the
entire TSF in 2021;
· North and west dump leach area - A US$0.4 million (2021: $2.6
million) increase in the cost including the cost of supplying and installing
an impermeable liner over the dump leach areas; and
· US$1.5 million (2021: $1.6 million) increase in the engineering
cost of mine closure planning and design related work.
Estimates in the process include the unit costs used in calculating the
provision e.g., ripping and grading, hauling and application, regrading
slopes, construction of bunds and demolition of buildings and certain fixed
costs, including labour and dismantling of equipment.
For rehabilitation activities measured in tonnes, the unit costs range between
$0.31/t to US$0.77/t and those measured in cubic metres and for surface areas
measured in metres, the unit cost used are as follows:
· Load and haul waste rock by mass (average haul distance of $0.31/t
2km)
· Load and haul waste rock by mass (average haul distance of $0.77/t
6km)
· Load and haul waste rock by volume (average haul distance of 2km) $0.66/m3
· Spread waste rock to create cover $1.25/m3
· Load and haul demolition waste for on-site landfill $1.97/m3
· Demolish concrete foundations (medium reinforced) $53.00/m3
· Regrade slopes and batters $0.40/m2
· Rip and grade compacted surfaces $0.95/m2
· Demolish buildings (mix of prefabricated, steel and blockwork) $8.00/m2
The range of the estimated unit costs as outlined above is primarily driven by
the level of the work required for each work area requiring restoration and
rehabilitation activity, the extent of the mine areas and/or infrastructure or
equipment requiring such work as well as the expected mix of the resources to
execute the activities i.e., either internally sourced, contracted third
party, other specialist resource or a combination of the three.
Sukari has a life of mine which runs through to 2033 and while generally the
majority of restoration and rehabilitation work will be undertaken when the
economically viable resources of the mine are depleted at the end of the life
of mine, the actual estimated timing of cash outflows for the restoration and
rehabilitation work may be different and, in some cases, significantly
different due to various factors, including the discovery of more resources
that increase the quantities of economically recoverable resources and
therefore, extend the life of mine. The ore reserves available for economic
extraction, the extent of the area they are located and the timeframe within
which they are reasonably expected to be depleted and consequently for
rehabilitation activities to commence therefore, have a significant impact in
the estimation process of the restoration and rehabilitation provision amount.
Most of the unit rates have not changed from prior year while others have
marginally changed. As the rehabilitation and restoration work will be done
in-country, management has considered the year-on-year inflation in Egypt
and particularly the devaluation of the Egyptian currency, EGP against the
USD, in the year (of over 45%) and concluded that maintaining the unit rates
within the same range as the prior year would be reasonable in the estimation
process for the current year provision.
Management has performed sensitivity analyses of reasonably possible changes
in the significant assumptions which are primarily the unit costs of the
rehabilitation activities above as well as the discount and inflation rates.
The sensitivity results below are based on illustrative percentage changes,
however the estimates may vary by greater amounts. The provision for
restoration and rehabilitation may also change where reserve estimate changes
affect expectations about when such activities will occur and therefore the
associated cost of these activities.
The reported provision and corresponding asset amount would change as shown
below should there be a change in the estimated unit cost rates, discount
rates and inflation rate assumptions on the basis that all the other factors
that can potentially change remain constant. Also analysed was a change in the
estimated unit cost due to the rehabilitation process being executed
illustratively five years later due to changes in the reserve estimates
altering the expected dates of performing the rehabilitation:
· A 10% increase in these estimated unit and fixed costs elements
would result in a US$3.1 million increase on the provision and corresponding
asset amounts, while a 10% decrease would result in a US$3.1 million decrease.
· A 10% increase in these unit and fixed costs with a five year longer
time horizon to perform the rehabilitation activities would result in a US$0.7
million increase on the provision and corresponding asset amounts, while a 10%
decrease would result in a US$5.1 million decrease.
· A 10% increase in the discount rate would result in a US$1.4 million
decrease on the provision and corresponding asset amounts, while a 10%
decrease would result in a US$1.4 million increase.
· A 10% increase in the inflation rate would result in a US$0.9
million increase on the provision and corresponding asset amounts, while a 10%
decrease would result in a US$0.9 million decrease.
The above scenarios resulted in increases of the restoration and
rehabilitation provision ranging from US$0.7 million to US$3.1 million and
decreases ranging from US$0.9 million to US$5.1 million. All the scenarios
would have an insignificant effect on the consolidated statement of
comprehensive income, through immaterial movements in the interest cost on the
liability and reduced rehabilitation asset amortisation charge. Refer to note
2.13 for additional information on the restoration and rehabilitation
provision movements.
The sensitivities analysed above reflect both reasonably possible changes in
the provisions in response to changes in the underlying assumptions as well as
an illustrative analysis from a change in rehabilitation activities'
timeframe.
1.4 OTHER SIGNIFICANT ACCOUNTING POLICIES
1.4.1 PRINCIPLES OF CONSOLIDATION
The consolidated financial statements are prepared by combining the financial
statements of all the entities that comprise the consolidated entity, being
the Company (the parent entity) and its subsidiaries. Subsidiaries are all
entities (including structured entities) over which the Group has control, as
defined in IFRS 10 'Consolidated financial statements'. Consistent accounting
policies are employed in the preparation and presentation of the consolidated
financial statements.
The consolidated financial statements include the information and results of
each subsidiary and controlled entity from the date on which the Company
obtains control and until such time as the Company ceases to control such
entities. The Group controls an entity when the Group is exposed to, or has
rights to, variable returns from its involvement with the entity and has the
ability to affect those returns through its power over the entity.
In preparing the consolidated financial statements, all intercompany balances
and transactions, and unrealised profits arising within the consolidated
entity, are eliminated in full.
2. HOW NUMBERS ARE CALCULATED
2.1 SEGMENT REPORTING
The Group is engaged in the business of exploration for and mining of precious
metals, which represents three operating segments, two in the business of
exploration and one in mining of precious metals. The Board is the Group's
chief operating decision-maker within the meaning of IFRS 8 'Operating
segments'. Management has determined the operating segments based on the
information reviewed by the Board for the purposes of allocating resources and
assessing performance.
The Board considers the business from a geographic perspective and a mining of
precious metals versus exploration for precious metals perspective.
Geographically, management considers separately the performance in Egypt,
Burkina Faso, Côte d'Ivoire and Corporate (which includes Jersey, United
Kingdom, and Australia). From a mining of precious metals versus exploration
for precious metals perspective, management separately considers the Egyptian
mining of precious metals from the Egyptian and West African exploration for
precious metals in these geographies. The Egyptian mining operations derive
revenue from the sale of gold while the West African and the new Egyptian
entities are currently only engaged in precious metal exploration and do not
produce any revenue.
The Board assesses the performance of the operating segments based on profits
and expenditure incurred as well as exploration expenditure in each region.
Egypt is the only operating segment with one of its entities, SGM, mining
precious metals and therefore has revenue and cost of sales whilst the
remaining operating segments do not. All operating segments are reviewed by
the Board as presented and are key to the monitoring of ongoing performance
and assessing plans of the Company.
Non-current assets, including financial instruments by country:
31 December 2022 Total Egypt Burkina Faso Côte d'Ivoire Corporate
US$'000 US$'000 US$'000 US$'000 US$'000
Non-current assets (excl. financial assets) 1,206,231 1,204,956 - 826 449
Non-current assets (financial instruments) 1,372 1,270 20 82 -
Total non-current assets 1,207,603 1,206,226 20 908 449
Total Egypt Burkina Faso Côte d'Ivoire Corporate
US$'000 US$'000 US$'000 US$'000 US$'000
31 December 2021
Non-current assets (excl. financial assets) 1,046,234 1,044,543 505 516 670
Non-current assets (financial instruments) 101 - 21 80 -
Total non-current assets 1,046,335 1,044,543 526 596 670
Additions to non-current assets mainly relate to Egypt and are disclosed in
note 2.9.
Statement of financial position by operating segment:
31 December 2022 + Egypt Egypt Exploration Burkina Côte Corporate
Mining US$'000 Faso d'Ivoire US$'000
US$'000 US$'000 US$'000
Total assets 1,493,533 1,413,266 4,057 40 4,074 72,096
Total liabilities (152,126) (142,556) (533) (470) (3,421) (5,146)
Net assets (liability)/total equity 1,341,407 1,270,710 3,524 (430) 653 66,950
Total Egypt Mining Egypt Exploration Burkina Côte Corporate
US$'000 US$'000 US$'000 Faso d'Ivoire US$'000
US$'000 US$'000
31 December 2021
Total assets 1,423,420 1,228,758 935 1,724 1,650 190,353
Total liabilities (133,662) (129,762) - (368) (829) (2,703)
Net assets/total equity 1,289,758 1,098,996 935 1,356 821 187,650
Statement of comprehensive income by operating segment:
For the year ended 31 December 2022((1)) Total Egypt Egypt Exploration Burkina Côte Corporate
US$'000 Mining US$'000 Faso d'Ivoire US$'000
US$'000 US$'000 US$'000
Revenue 788,424 788,424 - - - -
Cost of sales (544,075) (544,075) - - - -
Gross profit 244,349 244,349 - - - -
Exploration and evaluation costs (29,723) - (1,675) (2,928) (25,120) -
Other operating costs((1)) (49,003) (27,299) (116) (506) (326) (20,756)
Other income 6,623 8,039 196 (168) (666) (778)
Finance income 1,214 99 - - - 1,115
Finance costs((1)) (2,459) (1,098) (19) (2) (58) (1,282)
Impairment of intra-group loans - - - 140,623 - (140,623)
Profit/(loss) for the year before tax 171,001 224,090 (1,614) 137,019 (26,170) (162,324)
Tax (226) (226) - - - -
Profit/(loss) for the year after tax 170,775 223,864 (1,614) 137,019 (26,170) (162,324)
Profit/(loss) for the year after tax attributable to:
- the owners of the parent(2) 72,490 125,579 (1,614) 137,019 (26,170) (162,324)
- non-controlling interest in SGM(2) 98,285 98,285 - - - -
(1) In the 2021 Consolidated Statement of Comprehensive Income, Finance costs
were included and disclosed in the line 'Other operating costs', in these
financial statements they are now separately disclosed in their own line and
as such 'Other operating costs' for 2021 have changed.
(2) Please note that the cost recovery model on which profit share is based
under the Concession Agreement is different to the accounting results
presented above due to various adjustments and as such the share of profit
disclosed above is not reflective of the 55%:45% split that was in place from
1 July 2018 to 30 June 2020 and 50%:50% split from 1 July 2020 onwards that
occurs in practice, refer to the statement of cash flows by operating segment
below for further information.
STATEMENT OF COMPREHENSIVE INCOME BY OPERATING SEGMENT:
For the year ended 31 December 2021 Total Egypt Egypt Exploration Burkina Côte Corporate
US$'000 Mining US$'000 Faso d'Ivoire US$'000
US$'000 US$'000 US$'000
Revenue 733,306 733,306 - - - -
Cost of sales (487,376) (487,376) - - - -
Gross profit 245,930 245,930 - - - -
Exploration and evaluation costs (13,879) - - (2,380) (11,499) -
Other operating costs((1)) (48,427) (15,158) - (19) (227) (33,024)
Other income 5,708 6,922 - (105) (238) (871)
Finance income 196 (1) - - - 197
Finance costs((1)) (673) (598) - (2) (20) (52)
Impairment of exploration and evaluation asset (35,208) - - (35,208) - -
Profit/(loss) for the year before tax 153,647 237,095 - (37,714) (11,984) (33,750)
Tax 20 20 - - - -
Profit/(loss) for the year after tax 153,667 237,115 - (37,714) (11,984) (33,750)
Profit/(loss) for the year after tax attributable to:
- the owners of the parent(2) 101,527 184,975 - (37,714) (11,984) (33,750)
- non-controlling interest in SGM(2) 52,140 52,140 - - - -
(1) In the 2021 Consolidated Statement of Comprehensive Income, Finance costs
were included and disclosed in the line 'Other operating costs', in these
financial statements they are now separately disclosed in their own line and
as such 'Other operating costs' for 2021 have changed.
(2) Please note that the cost recovery model on which profit share is
based under the Concession Agreement is different to the accounting results
presented above due to various adjustments and as such the share of profit
disclosed above is not reflective of the 55%:45% split that was in place from
1 July 2018 to 30 June 2020 and 50%:50% split from the 1 July 2020 onwards
that occurs in practice, refer to the statement of cash flows by operating
segment below for further information.
Statement of cash flows by operating segment:
For the year ended 31 December 2022 Total Egypt Mining Egypt Exploration Burkina Faso Côte d'Ivoire Corporate
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Statement of cash flows
Net cash generated from/(used in) operating activities(1) 291,936 320,954 1,912 (2,644) 1,673 (29,959)
Net cash (used in)/generated from investing activities (274,583) (274,120) (976) - (595) 1,108
Net cash used in financing activities (122,219) (35,492) - - - (86,727)
Cash element of share-based payments (523) - - - - (523)
Dividend paid - non-controlling interest in SGM (35,492) (35,492) - - - -
Dividend paid - owners of the parent (86,204) - - - - (86,204)
Net (decrease)/increase in cash and cash equivalents (104,866) 11,342 936 (2,644) 1,078 (115,578)
Cash and cash equivalents at the beginning of the year 207,821 13,609 935 5 859 192,413
Effect of foreign exchange rate changes (582) 2,422 100 2,640 (515) (5,229)
Cash and cash equivalents at the end of the year 102,373 27,373 1,971 1 1,422 71,606
(1) Please note that the cash generated by operating activities for
Burkina Faso and Côte d'Ivoire are affected by the movements in working
capital, specifically intercompany loans, with its direct parent entity
Centamin West Africa Holdings Limited which is included within the corporate
segment.
For the year ended 31 December 2021 Total Egypt Mining Egypt Exploration Burkina Faso Côte d'Ivoire Corporate
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Statement of cash flows
Net cash generated from/(used in) operating activities(1) 309,878 372,972 887 200 901 (65,082)
Net cash (used in)/generated from investing activities (240,676) (241,250) - (1) (308) 883
Net cash used in financing activities (157,108) (150,400) - - - (6,708)
Own shares acquired (1,391) - - - - (1,391)
Dividend paid - non-controlling interest in SGM (75,200) (75,200) - - - -
Dividend (paid)/received - controlling interest in SGM - (75,200) - - - 75,200
Dividend paid - owners of the parent (80,517) - - - - (80,517)
Net (decrease)/increase in cash and cash equivalents (87,906) (18,678) 887 199 593 (70,907)
Cash and cash equivalents at the beginning of the year ((2)) 291,281 11,899 - 5 456 278,921
Effect of foreign exchange rate changes ((2)) 4,446 20,388 48 (199) (190) (15,601)
Cash and cash equivalents at the end of the year ((2)) 207,821 13,609 935 5 859 192,413
(1) Please note that the cash generated by operating activities for
Burkina Faso and Côte d'Ivoire are affected by the movements in working
capital, specifically intercompany loans, with its direct parent entity
Centamin West Africa Holdings Limited which is included within the corporate
segment.
(2) The numbers have been restated to reflect a reclassification of
US$2m on the opening cash and cash equivalents balance and US$5m on the
foreign exchange rate change between Corporate and Egypt Mining segments.
ACCOUNTING POLICY: SEGMENT REPORTING
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker. The chief operating
decision-maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the Board of
Directors.
2.2 Revenue
An analysis of the Group's revenue for the year, is as follows:
For the year ended For the year ended
31 December 2022 31 December 2021
US$'000 US$'000
Gold sales 786,921 731,945
Silver sales 1,503 1,361
788,424 733,306
All gold and silver sales during the year were made to a single customer in
North America, Asahi Refining Canada Ltd.
ACCOUNTING POLICY: REVENUE
Revenue is measured at the fair value of the consideration received or
receivable for goods in the normal course of business.
Sale of goods
Under IFRS 15, revenue from the sale of mineral production is recognised when
the Group has passed control of the mineral production to the buyer (the
performance obligation) , it is probable that economic benefits associated
with the transaction will flow to the Group, the sales price can be measured
reliably, and the Group has no significant continuing involvement and the
costs incurred or to be incurred in respect of the transaction can be measured
reliably. This is when insurance risk has passed to the buyer and the goods
have been collected at the agreed location.
The performance obligation is satisfied when the doré bars are packaged and
collected by the approved carrier with the appropriate required documentation
at the gold room and the approved carrier accepts control of the shipment by
signature. 98% of the payable gold and silver content of the refined gold bars
will be priced and paid within one working day after receipt of the shipment
at the refinery with the balance being paid five working days after receipt.
There are no significant judgements applied to the determination of revenue.
Where the terms of the executed sales agreement allow for an adjustment to the
sales price based on a survey of the mineral production by the buyer (for
instance an assay for gold content), recognition of the revenue from the sale
of mineral production is based on the most recently determined estimate of
product specifications.
Royalty
The Arab Republic of Egypt ("ARE") is entitled to a royalty of 3% of net sales
revenue (revenue net of freight and refining costs) as defined from the sale
of gold and associated minerals from SGM. This royalty is calculated and
recognised on receipt of the final certificate of analysis document received
from the refinery. Due to its nature, this royalty is not recognised in cost
of sales but rather in other operating costs.
2.3 Profit before tax
Profit for the year before tax has been arrived at after crediting/(charging)
the following gains/(losses) and income/ (expenses):
For the year ended For the year ended
31 December 2022 31 December 2021
US$'000 US$'000*
Other income
Net foreign exchange gains 6,559 5,158
Other income 64 550
6,623 5,708
Finance income 1,214 196
Finance costs (2,459) (672)
Expenses
Cost of sales
Mine production costs (408,543) (368,327)
Movement in inventory 10,659 19,968
Depreciation and amortisation (146,191) (139,017)
(544,075) (487,376)
Other operating costs
Corporate compliance (2,869) (2,698)
Fees payable to the external auditors (895) (856)
Corporate consultants (2,697) (1,914)
Salaries and wages (11,979) (10,094)
Other administration expenses (3,272) (3,070)
Employee equity settled share-based payments (2,570) (3,747)
Corporate costs (sub-total) (24,282) (22,379)
Other provisions 1,180 (731)
Net movement on provision for stock obsolescence (579) (3,135)
Other non-corporate operating expenses (1,480) (511)
Royalty - attributable to the ARE government (23,842) (21,672)
Other operating costs (total) (49,003) (48,428)
* In the 2021 Consolidated Statement of Comprehensive Income, Finance costs
were included and disclosed in the line 'Other operating costs', in these
financial statements they are now separately disclosed in their own line and
as such 'Other operating costs' for 2021 have changed.
ACCOUNTING POLICY: FINANCE INCOME, OTHER INCOME AND FOREIGN CURRENCIES
FINANCE INCOME
Finance income is recognised when it is probable that the economic benefits
will flow to the Group and the amount of income can be measured reliably.
Finance income is accrued on a time basis, by reference to the principal
outstanding and at the effective interest rate applicable, which is the rate
that discounts estimated future cash receipts through the expected life of the
financial asset to that asset's net carrying amount.
Finance income is generated mainly from treasury activities (e.g., income on
surplus funds invested for the short term) and therefore is separately
disclosed outside of the Group's operating profit in the consolidated
statement of comprehensive income and disclosed as a separate line under
investing activities in the consolidated statement of cash flows.
FOREIGN CURRENCIES
The individual financial statements of each Group entity are presented in its
functional currency, being the currency of the primary economic environment in
which the entity operates. For the purpose of the consolidated financial
statements, the results and financial position of each entity are expressed in
US dollars, which is the functional currency of all companies in the Group and
the presentation currency for the consolidated financial statements.
In preparing the financial statements of the individual entities, transactions
in currencies other than the entity's functional currency are recorded at the
rates of exchange prevailing on the dates of the transactions. At each
reporting date, monetary items denominated in foreign currencies are
retranslated at the rates prevailing at the reporting date. Non-monetary items
carried at fair value that are denominated in foreign currencies are
retranslated at the rates prevailing on the date when the fair value was
determined.
Non-monetary items that are measured in terms of historical cost in a foreign
currency are not retranslated. Exchange differences are recognised in profit
or loss in the period in which they arise.
ACCOUNTING POLICY: FINANCE COSTS
FINANCE COSTS
Finance costs for the Group will normally include:
· Costs that are borrowing costs for the purposes of IAS 23 Borrowing
Costs:
o interest expense calculated using the effective interest rate method as
described in IFRS 9 Financial Instruments;
o interest in respect of lease liabilities; and
o exchange differences arising from foreign currency borrowings to the
extent that they are regarded as an adjustment to interest costs.
· the unwinding of the effect of discounting provisions.
Borrowing costs directly attributable to the acquisition, construction or
production of an asset that necessarily takes a substantial period of time to
get ready for its intended use or sale (a qualifying asset) are capitalised as
part of the cost of the respective asset. Borrowing costs consist of interest
and other costs that the Group incurs in connection with the borrowing of
funds.
Where funds are borrowed specifically to finance a project, the amount
capitalised represents the actual borrowing costs incurred. Where surplus
funds are available for a short term from funds borrowed specifically to
finance a project, the income generated from the temporary investment of such
amounts is also capitalised and deducted from the total capitalised borrowing
cost. Where the funds used to finance a project form part of general
borrowings, the amount capitalised is calculated using a weighted average of
rates applicable to relevant general borrowings of the Group during the
period.
All other borrowing and finance costs which are generally incurred in the
Group's ordinary activities are recognised in the statement of profit or loss
and other comprehensive income in the period in which they are incurred, and
the Group would also include foreign exchange differences on directly
attributable borrowings as borrowing costs capable of capitalisation to the
extent that they represented an adjustment to interest costs. These finance
costs are separately disclosed in the consolidated statement of comprehensive
income as required by IAS 1 Presentation of Financial Statements and disclosed
under operating activities in the consolidated statement of cash flows.
Even though exploration and evaluation assets can be qualifying assets, they
generally do not meet the 'probable economic benefits' test therefore any
related borrowing costs incurred during this phase are generally recognised
in the statement of profit or loss and other comprehensive income in the
period they are incurred.
2.4 NON-CONTROLLING INTEREST IN SGM
EMRA is a 50% shareholder in SGM and is entitled to a share of 50% of SGM's
net production surplus which can be defined as 'revenue less payment of the
fixed royalty to the ARE and recoverable costs'.
Earnings attributable to the non-controlling interest in SGM (i.e., EMRA) are
pursuant to the provisions of the CA and are recognised as profit attributable
to the non-controlling interest in SGM in the attribution of profit section of
the statement of comprehensive income of the Group. The profit share payments
during the year will be reconciled against SGM's audited financial statements.
SGM financial statements for the year ended 30 June 2022 have been audited and
signed off at the date of this report.
Certain terms of the CA and amounts in the cost recovery model may also vary
depending on interpretation and management and the Board making various
judgements and estimates that can affect the amounts recognised in the
financial statements.
(A) STATEMENT OF COMPREHENSIVE INCOME AND STATEMENT OF FINANCIAL POSITION
IMPACT
For the year ended For the year ended
31 December 2022 31 December 2021
US$'000 US$'000
Statement of comprehensive income
Profit for the year after tax attributable to the non-controlling interest in 98,285 52,140
SGM(1)
Statement of financial position
Total equity attributable to non-controlling interest in SGM(1) (opening) (40,256) (17,196)
Profit for the year after tax attributable to the non-controlling interest in 98,285 52,140
SGM(1)
Dividend paid - non-controlling interest in SGM (35,492) (75,200)
Total equity attributable to non-controlling interest in SGM(1) (closing) 22,537 (40,256)
(1) Profit share commenced during the third quarter of 2016. The first two
years was a 60:40 split of net production surplus to PGM and EMRA
respectively. From 1 July 2018 this changed to a 55:45 split for the next
two-year period until 30 June 2020, after which all net production surpluses
have been split 50:50.
Any variation between payments made during the year (which are based on the
Company's estimates) and the SGM audited financial statements, may result in a
balance due and payable to EMRA or advances to be offset against future
distributions. This will be reflected as an amount attributable to the
non-controlling interest in SGM on the statement of financial position and
statement of changes in equity.
(B) STATEMENT OF CASH FLOWS IMPACT
For the year ended For the year ended
31 December 2022 31 December 2021
US$'000 US$'000
Statement of cash flows
Dividend paid - non-controlling interest in SGM(1) (35,492) (75,200)
(1) Profit share commenced during the third quarter of 2016. The first two
years was a 60:40 split of net production surplus to PGM and EMRA
respectively. From 1 July 2018 this changed to a 55:45 split for the next
two-year period until 30 June 2020, after which all net production surpluses
will be split 50:50.
EMRA and PGM benefit from advance distributions of profit share which are made
on a weekly or fortnightly basis and proportionately in accordance with the
terms of the CA. Future distributions will consider ongoing cash flows,
historical costs that are still to be recovered and any future capital
expenditure. All profit share payments will be reconciled against SGM's
audited June financial statements for current and future periods.
2.5 TAX
The Group operates in several countries and, accordingly, it is subject to the
various tax regimes in the countries in which it operates. From time to time
the Group is subject to a review of its related tax filings and in connection
with such reviews, disputes can arise with the taxing authorities over the
interpretation or application of certain rules to the Group's business
conducted within the country involved. If the Group is unable to resolve any
of these matters favourably, there may be an adverse impact on the Group's
financial performance, cash flows or results of operations. If management's
estimate of the future resolution of these matters changes, the Group will
recognise the effects of the changes in its consolidated financial statements
in the period that such changes occur.
In Egypt, Pharaoh Gold Mines NL ("PGM") has entered into a Concession
Agreement ("CA") that provides that the income generated by SGM's activities
is granted a long-term tax exemption from all taxes imposed in Egypt, other
than the fixed royalty attributable to the Egyptian government, rental income
on property and interest income on cash and cash equivalents.
The CA grants certain tax exemptions, including the following:
· from 1 April 2010, being the date of commercial production, SGM
is entitled to a 15-year exemption from any taxes imposed by the Egyptian
government on the revenues generated from SGM. PGM and EMRA intend that SGM
will in due course file an application to extend the tax-free period for a
further 15 years. The extension of the tax-free period requires that there
have been no tax problems or disputes in the initial period and that certain
activities in new remote areas have been planned and agreed by all parties;
· PGM and SGM are exempt from custom taxes and duties with respect
to the importation of machinery, equipment and consumable items required for
the purpose of exploration and mining activities at SGM. The exemption shall
only apply if there is no local substitution with the same or similar quality
to the imported machinery, equipment, or consumables. Such exemption will also
be granted if the local substitution is more than 10% more expensive than the
imported machinery, equipment, or consumables after the addition of the
insurance and transportation costs;
· PGM, EMRA and SGM and their respective buyers will be exempt from
any duties or taxes on the export of gold and associated minerals produced
from SGM;
· PGM at all times is free to transfer in US$ or other freely
convertible foreign currency, any cash of PGM representing its share of net
proceeds and recovery of costs, without any Egyptian government limitation,
tax or duty;
· PGM's contractors and subcontractors are entitled to import
machinery, equipment, and consumable items under the 'Temporary Release
System' which provides exemption from Egyptian customs duty; and
· legal title of all operating assets of PGM will pass to EMRA when
cost recovery is completed. The right of use of all fixed and movable assets
remains with PGM and SGM.
RELEVANCE OF TAX CONSOLIDATION TO THE CONSOLIDATED ENTITY
In Australia, Centamin Egypt Limited and Pharaoh Gold Mines NL, both wholly
owned Australian resident entities within the Group, have elected to form a
tax-consolidated group from 1 July 2003 and therefore are treated as a single
entity for Australian income tax purposes. The head entity within the
tax-consolidated group is Centamin Egypt Limited. Pharaoh Gold Mines NL, which
has a registered Egyptian branch, benefits from the 'branch profits exemption'
whereby foreign branch income will generally not be subject to Australian
income tax. Ampella Mining Limited is a single entity for Australian income
tax purposes.
NATURE OF TAX FUNDING ARRANGEMENTS AND TAX-SHARING AGREEMENTS
Entities within the Australian tax-consolidated group have entered into a tax
funding arrangement and a tax-sharing agreement with the head entity. Under
the terms of the tax-funding agreement, Centamin Egypt Limited and each of the
entities in the tax-consolidated group have agreed to pay a tax-equivalent
payment to or from the head entity, based on the current tax liability or
current tax asset of the entity. Such amounts are reflected in amounts
receivable from or payable to other entities in the tax‑consolidated group.
The tax-sharing agreement entered between members of the tax-consolidated
group provides for the determination of the allocation of income tax
liabilities between the entities should the head entity default on its tax
payment obligations. No amounts have been recognised in the financial
statements in respect of this agreement as payment of any amounts under the
tax-sharing agreement is considered remote.
Tax recognised in profit is summarised as follows:
TAX (EXPENSE)/CREDIT
For the year ended For the year ended
31 December 2022 31 December 2021
US$'000 US$'000
Current tax
Current tax (expense)/credit in respect of the current year (226) 20
Deferred tax - -
Total tax (expense)/credit (226) 20
The tax (expense)/credit for the year can be reconciled to the profit per the
consolidated statement of comprehensive income as follows:
For the year ended For the year ended
31 December 2022 31 December 2021
US$'000 US$'000
Profit for the year before tax 171,001 153,647
Tax expense calculated at 0%((1)) (2021: 0%)((1)) of profit for the year - -
before tax
Tax effect of:
Other (226) 20
Tax (226) 20
(1) The tax rate used in the above reconciliation is the corporate tax
rate of 0% payable by Jersey corporate entities under the Jersey tax law
(2021: 0%). There has been no change in the underlying corporate tax rates
when compared with the previous financial period.
Tax recognised in the balance sheet is summarised as follows:
For the year ended For the year ended
31 December 2022 31 December 2021
US$'000 US$'000
Current tax liabilities 249 253
ACCOUNTING POLICY: TAXATION
Income tax expense comprises current and deferred tax. It is recognised in
profit or loss except to the extent that it relates to a business combination,
or items recognised directly in equity or in OCI.
CURRENT TAX
The tax currently payable is based on taxable profit for the period. Taxable
profit differs from profit as reported in the consolidated statement of
comprehensive income because of items of income or expense that are taxable or
deductible in other periods and items that are never taxable or deductible.
The Group's liability for current tax is calculated using tax rates that have
been enacted or substantively enacted by the end of the reporting period.
DEFERRED TAX
Deferred tax is recognised on temporary differences between the carrying
amounts of assets and liabilities in the financial statements and the
corresponding tax bases used in the computation of taxable profit. Deferred
tax liabilities are generally recognised for all taxable temporary
differences. Deferred tax assets are generally recognised for all deductible
temporary differences to the extent that it is probable that taxable profits
will be available against which those deductible temporary differences can be
utilised. Such deferred tax assets and liabilities are not recognised if the
temporary difference arises from goodwill or from the initial recognition
(other than in a business combination) of other assets and liabilities in a
transaction that affects neither the taxable profit nor the accounting profit.
2.6 FINANCIAL INSTRUMENTS
INTEREST BEARING LOANS AND BORROWINGS
US$150 million Revolving Credit Facility ("RCF")
On 22 December 2022, the Company entered into an agreement for a US$150
million RCF with four banks: Bank of Montreal (London Branch), HSBC Bank plc,
ING Bank N.V. (Amsterdam Branch) and Nedbank Limited (London Branch).
As at 31 December 2022, there were no drawdowns on the facility and therefore
no interest expense was recognised in the period. A facility establishment and
commitment fee of US$1.2 million was recognised in the profit or loss
statement.
The terms and conditions of the facility imposes certain financial covenants
on the Company in respect of each Relevant Period that has an outstanding
borrowing as outlined below i.e., the Company shall ensure that:
a) Interest Cover: Interest Cover in respect of any Relevant Period
shall not be less than the ratio of 4:1;
b) Leverage: Leverage in respect of any Relevant Period shall not exceed
the ratio of 3:1;
c) Liquidity: Liquidity shall at all times exceed USD50,000,000; and
d) Reserve Tail: at each Scheduled Reserves Assessment Date, the Reserve
Tail Ratio is not less than thirty per cent. .
As at 31 December 2022, the Company's compliance requirements and obligations
in respect of financial covenants and financial conditions were not yet
effective as conditions precedent were not yet satisfied and completed to make
the agreement effective and available for drawdown.
The Relevant Period is defined as each period of twelve months ending on or
about the last day of the Financial Year and each period of twelve months
ending on or about the last day of each Financial Quarter.
ACCOUNTING POLICY: FINANCIAL INSTRUMENTS
FINANCIAL LIABILITIES AND EQUITY
Debt and equity instruments are classified as either financial liabilities or
as equity in accordance with the substance of the contractual arrangement as
defined below. Financial liabilities are recognised in the Group's balance
sheet when the Group becomes a party to the contractual provisions of the
instrument.
OTHER FINANCIAL LIABILITIES
Other financial liabilities, including borrowings, are initially measured at
fair value, net of transaction costs. Other financial liabilities are
subsequently measured at amortised cost using the effective interest method,
with interest expense recognised on an effective yield basis.
DERECOGNITION OF FINANCIAL LIABILITIES
The Group derecognises financial liabilities when, and only when, the Group's
obligations are discharged, cancelled or they expire.
FINANCIAL ASSETS
CLASSIFICATION
The Group classifies its financial assets in the following measurement
categories:
· those to be measured subsequently at fair value (either through
OCI or through profit or loss), and
· those to be measured at amortised cost.
The classification depends on the entity's business model for managing the
financial assets and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in
profit or loss or OCI. For investments in equity instruments that are not held
for trading, this will depend on whether the Group has made an irrevocable
election at the time of initial recognition to account for the equity
investment at Fair Value through other Comprehensive Income ("FVOCI").
RECOGNITION AND DERECOGNITION
Purchases and sales of financial assets are recognised on trade date, being
the date on which the Group commits to purchase or sell the asset.
Financial assets are derecognised when the rights to receive cash flows from
the financial assets have expired or have been transferred and the Group has
transferred substantially all the risks and rewards of ownership. If the Group
neither transfers nor retains substantially all the risks and rewards of
ownership and continues to control the transferred asset, the Group recognises
its retained interest in the asset and an associated liability for amounts it
may have to pay. If the Group retains substantially all the risks and rewards
of ownership of a transferred financial asset, it continues to recognise the
financial asset and also recognises a collateralised borrowing for the
proceeds received.
MEASUREMENT
At initial recognition, the Group measures a financial asset at its fair value
plus, in the case of a financial asset not at Fair Value through Profit or
Loss ("FVPL"), transaction costs that are directly attributable to the
acquisition of the financial asset. Transaction costs of financial assets
carried at FVPL are expensed in profit or loss. Financial assets with embedded
derivatives are considered in their entirety when determining whether their
cash flows are solely payment of principal and interest.
Subsequent to initial recognition, investments in subsidiaries are measured at
cost in the Company's financial statements. The classification depends on the
nature and purpose of the financial assets and is determined at the time of
initial recognition.
EFFECTIVE INTEREST METHOD
The effective interest method is a method of calculating the amortised cost of
a financial asset and of allocating interest income over the relevant period.
The effective interest rate is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial asset, or,
where appropriate, a shorter period, to the net carrying amount on initial
recognition.
FINANCIAL ASSETS AT AMORTISED COST
Trade receivables, loans and other receivables that have fixed or determinable
payments that are not quoted in an active market are classified as financial
assets at amortised cost. This category of financial assets is measured at
amortised cost using the effective interest rate method less impairment.
Interest is recognised by applying the effective interest rate except for
short-term receivables when the recognition of interest would be immaterial.
IMPAIRMENT OF FINANCIAL ASSETS
Financial assets, other than those at fair value through profit or loss, are
assessed for indicators of impairment at each reporting date. In accordance
with of IFRS 9 "Financial Instruments", a loss allowance shall be recognised
for expected credit losses on a financial asset that is measured in accordance
with paragraphs 4.1.2 or 4.1.2A, a lease receivable, a contract asset or a
loan commitment and a financial guarantee contract to which the impairment
requirements apply in accordance with paragraphs 2.1(g), 4.2.1(c) or 4.2.1(d).
The objective of the impairment requirements is to recognise lifetime expected
credit losses for which there have been significant increases in credit risk
since initial recognition, whether assessed on an individual or collective
basis, considering all reasonable and supportable information, including that
which is forward-looking.
At each reporting date, the Group assesses whether financial assets carried at
amortised cost are credit impaired. A financial asset is credit-impaired when
one or more events that have a detrimental impact on the estimated future cash
flows of the financial asset have occurred.
The carrying amount of the financial asset is reduced by the impairment loss
directly for all financial assets through the use of an allowance account,
with a simplified approach for trade receivables. When a trade receivable is
uncollectible, it is written off against the allowance account. Subsequent
recoveries of amounts previously written off are credited against the
allowance account. Changes in the carrying amount of the allowance account are
recognised in profit or loss.
With the exception of financial assets at fair value through other
comprehensive income equity instruments, if, in a subsequent period, the
amount of the impairment loss decreases and the decrease can be related
objectively to an event occurring after the impairment was recognised, the
previously recognised impairment loss is reversed through profit or loss to
the extent the carrying amount of the investment at the date the impairment is
reversed does not exceed what the amortised cost would have been had the
impairment not been recognised.
In respect of FVOCI equity instruments, any subsequent increase in fair value
after an impairment loss is recognised in other comprehensive income.
2.7 TRADE AND OTHER RECEIVABLES
For the year ended For the year ended
31 December 2022 31 December 2021
US$'000 US$'000
Non-current
Other receivables - deposits 1,372 101
Current
Gold and silver sales debtor 29,832 29,147
Other receivables 5,796 3,432
35,628 32,579
Trade and other receivables are classified as financial assets subsequently
measured at amortised cost.
All gold and silver sales during the year were made to a single customer in
North America, Asahi Refining Canada Ltd, and are neither past due nor
impaired.
The average age of the receivables is 16 days (2021: 16 days) and expected
credit losses are considered immaterial. No interest is charged on the
receivables. Of the trade receivables balance, the gold and silver sales
debtor is all receivable from Asahi Refining Canada Ltd. The amount due has
been received in full after year end. Other receivables represent GST and VAT
owing from various jurisdictions that the Group operates in.
The Directors consider that the carrying amount of trade and other receivables
is approximately equal to their fair value, therefore no expected credit loss
is recognised within this note, see note 3.1.1 for the risk assessment related
to trade receivables.
2.8 PREPAYMENTS
For the year ended For the year ended
31 December 2022 31 December 2021
US$'000 US$'000
Current
Prepayments ((1)) 13,864 7,964
13,864 7,964
(1) The prepayments balance above mainly consists of warehouse inventories
paid for in advance.
2.9 PROPERTY, PLANT, AND EQUIPMENT
Office Buildings Plant and Mining Mine Capital Total
equipment US$'000 equipment equipment development work in US$'000
US$'000 US$'000 US$'000 properties progress
US$'000 US$'000
Year ended 31 December 2022 Cost
Balance at 1 January 2022 9,243 13,823 625,077 359,467 816,224 85,003 1,908,837
Additions 127 1,041 526 281 - 261,647 263,622
Additions: IFRS 16 right of use assets - 2,342 1,399 4,005 - - 7,746
Decrease in rehabilitation asset - - - - (5,839) - (5,839)
Transfers from capital work in progress 508 6,587 10,808 63,201 186,742 (267,846) -
Transfers from exploration and evaluation asset - - - - 12,627 - 12,627
Disposals (1,727) (1,019) (2,434) (43,294) - - (48,474)
Disposals: IFRS 16 right of use assets - (1,073) - (139) - - (1,212)
Balance at 31 December 2022 8,151 21,701 635,376 383,521 1,009,754 78,804 2,137,307
Accumulated depreciation and amortisation
Balance at 1 January 2022 (7,543) (3,026) (275,640) (288,323) (378,088) - (952,620)
Depreciation and amortisation (818) (2,221) (34,467) (43,455) (65,808) - (146,769)
Disposals 1,727 1,674 2,073 43,257 - - 48,731
Balance at 31 December 2022 (6,634) (3,573) (308,034) (288,521) (443,896) - (1,050,658)
Year ended 31 December 2021 Cost
Balance at 1 January 2021 8,792 5,690 617,465 359,009 662,496 44,554 1,698,006
Additions 11 - 54 231 - 224,633 224,929
Increase in rehabilitation asset - - - - 21,875 - 21,875
Transfers from capital work in progress 1,127 8,489 7,848 54,042 112,678 (184,184) -
Transfers from exploration and evaluation asset - - - - 19,175 - 19,175
Disposals (687) (5) (290) (53,673) - - (54,655)
Disposals: IFRS 16 right of use assets - (351) - (142) - - (493)
Balance at 31 December 2021 9,243 13,823 625,077 359,467 816,224 85,003 1,908,837
Accumulated depreciation and amortisation
Balance at 1 January 2021 (7,542) (1,641) (242,853) (298,572) (317,514) - (868,122)
Depreciation and amortisation (688) (1,597) (33,077) (43,518) (60,574) - (139,454)
Disposals 687 212 290 53,769 - - 54,958
Balance at 31 December 2021 (7,543) (3,026) (275,640) (288,323) (378,088) - (952,620)
Net book value
As at 31 December 2022 1,517 18,128 327,342 95,000 565,858 78,804 1,086,649
As at 31 December 2021 1,700 10,797 349,437 71,144 438,136 85,003 956,217
Included within the depreciation charge in relation to depreciation of ROU
assets is US$1 million within the buildings asset class (2021: US$0.7
million), US$0.3 million within plant and equipment (2021: US$0.1 million) and
US$0.9 million related to mining equipment (2021: US$ Nil ).
The net book value of the assets in the note above includes the following
amounts relating to ROU assets on leases; US$2.4 million (2021: US$1.0
million) within buildings, US$1.1 million (2021: US$0.1 million) within plant
and equipment and US$3.2 million (2021: US$0.1 million) within mining
equipment.
An impairment trigger assessment was performed in 2022 on all Cash Generating
Units ("CGUs") including the Sukari Mine, refer to note 1.3.2 above, however
no impairment triggers on property, plant and equipment were identified in the
assessment.
Deferred stripping assets of US$141 million (2021: US$59 million) were
recognised in the year ended 31 December 2022 and have been included within
mine development properties. An amortisation charge of US$26 million (2021:
US$10 million) has been recognised in the year relating to the deferred
stripping assets.
Assets that have been cost recovered in Egypt under Concession Agreement
("CA") terms are included on the statement of financial position under
property, plant, and equipment due to the Company having the right of use of
these assets. These rights will expire together with the CA.
None of the Group's property, plant and equipment items is pledged as security
and the Group had US$19 million capital expenditure commitments as at 31
December 2022 (2021: US$17 million).
ACCOUNTING POLICY: PROPERTY, PLANT AND EQUIPMENT ("PPE")
PPE is stated at cost less accumulated depreciation and impairment. PPE will
include capitalised development expenditure. Cost includes expenditure that
is directly attributable to the acquisition of the item and the estimated cost
of abandonment. In the event that settlement of all or part of the purchase
consideration is deferred, cost is determined by discounting the amounts
payable in the future to their present value as at the date of acquisition.
Subsequent costs are included in the asset's carrying amount or recognised as
a separate asset, as appropriate, only when it is probable that future
economic benefits associated with the item will flow to the Group and the cost
of the item can be measured reliably. The carrying amount of the replaced part
is derecognised. All other repairs and maintenance are charged to the income
statement during the financial year in which they are incurred. The cost of
PPE includes the estimated restoration costs associated with the asset.
Depreciation is charged on PPE, except for capital work in progress.
Depreciation is calculated on a straight-line basis so as to write off the net
cost or other revalued amount of each asset over its expected useful life to
its estimated residual value. Depreciation on capital work in progress
commences on commissioning of the asset and transfer to the relevant PPE
category.
The estimated useful lives, residual values and depreciation method are
reviewed at the end of each annual financial year, with the effect of any
changes recognised on a prospective basis. The following estimated useful
lives are used in the calculation of straight-line basis depreciation:
Plant and equipment: 2 - 20 years
Office equipment: 3-7 years
Mining equipment: 2-13 years
Buildings 4-20 years
Where the assets relate to an active mine site, the shorter of the above
periods or remaining life of mine are used.
Freehold land is not depreciated, and all other depreciable assets are
depreciated over their useful life or the life of mine, whichever is shorter.
The gain or loss arising on the disposal or scrappage of an asset is
determined as the difference between the sales proceeds and the carrying
amount of the asset and is recognised in other income or operating expenses.
MINE DEVELOPMENT PROPERTIES
Where mining of a mineral reserve has commenced, the accumulated costs are
transferred from exploration and evaluation assets to mine development
properties.
Amortisation is first charged to new mine development ventures from the date
of first commercial production. Amortisation of mine properties is on a unit
of production basis resulting in an amortisation charge proportional to the
depletion of the proven and probable ore reserves. The unit of production is
on an ore tonne depleted basis for open pit mining property assets and an
ounce depleted basis for underground mining property assets.
Capitalised underground development costs incurred to enable access to
specific ore blocks or areas of the underground mine, and which only provide
an economic benefit over the period of mining that ore block or area, are
depreciated on a unit of production basis, whereby the denominator is
estimated ounces of gold in proven and probable reserves within that ore block
or area where it is considered probable that those reserves will be extracted
economically.
IFRIC 20 'STRIPPING COSTS IN THE PRODUCTION PHASE OF A SURFACE MINE'
IFRIC 20 provides clarity on how to account for and measure the removal of
mine waste materials which provide access to mineral ore deposits. Within
Sukari's open pit operations, removal of mine overburden or waste material is
routinely necessary to gain access to mineral ore deposits and this waste
removal activity is known as 'stripping'. There can be two benefits accruing
to the entity from the stripping activity:
· usable ore that can be used to produce inventory; and
· improved access to further quantities of material that will be
mined in future periods.
The costs of stripping activity to be accounted for in accordance with the
principles of IAS 2 'Inventories' to the extent that the benefit from the
stripping activity is realised in the form of inventory produced. The costs of
stripping activity which provides a benefit in the form of improved access to
ore is recognised as a non-current 'stripping activity asset' where the
following criteria are met:
• it is probable that the future economic benefit (improved access
to the ore body) associated with the stripping activity will flow to the
entity;
• the entity can identify the component of the ore body for which
access has been improved; and
• the costs relating to the stripping activity associated with that
component can be measured reliably.
When the costs of the stripping activity asset and the inventory produced are
not separately identifiable, production stripping costs are allocated between
the inventory produced and the stripping asset by using an allocation basis
that is based on a relevant production measure. A stripping activity asset is
accounted for as an addition to, or as an enhancement of, an existing asset
and classified as tangible or intangible according to the nature of the
existing asset of which it forms part.
A deferred stripping asset is initially measured at cost and subsequently
carried at cost or its revalued amount less depreciation or amortisation and
impairment losses. A stripping asset is depreciated or amortised on a
systematic basis, over the expected useful life of the identified component of
the ore body that becomes more accessible as a result of the stripping
activity. The stripping activity asset is depreciated using a unit of
production method based on the total ounces to be produced for the component
over the life of the component of the ore body.
Capitalised deferred stripping costs are included in 'Mine Development
Properties', within property, plant, and equipment. These form part of the
total investment in the relevant cash generating unit, which is reviewed for
impairment if events or a change in circumstances indicate that the carrying
value may not be recoverable. Amortisation of deferred stripping costs is
included in cost of sales.
The stripping costs associated with the current period operations are expensed
during that period and any stripping activity cost associated with producing
future benefit is deferred on the balance sheet and amortised over the period
that the benefit is received i.e., is classified as capital expenditure,
creating a Deferred Stripping asset.
The pit components are the separate stages of the open pit mine. For each
component, the stripping ratio is determined, and costs are capitalised if the
stripping ratio in the year for that component is greater than the overall LOM
stripping ratio for that component.
The change in mine plan has necessitated an increase in stripping activity
during the year (more than has been experienced in the past) and includes
activity from both internal and external parties. As a result, there has been
a significant increase in the stripping activity. Based on the calculations
performed the amount capitalised to the balance sheet for 2022 is US$141
million (2021: $59m).
IMPAIRMENT OF ASSETS (OTHER THAN EXPLORATION AND EVALUATION AND FINANCIAL
ASSETS)
At each reporting date, the Group reviews the carrying amounts of its tangible
and intangible assets to determine whether there is any indication that those
assets have suffered an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated to determine the extent of the
impairment loss (if any). For the purposes of assessing impairment, assets are
grouped at the lowest levels for which they potentially generate largely
independent cash inflows (cash generating units).
Recoverable amount is the higher of fair value loss costs to sell and value in
use. In assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects current
market assessment of the time value of money and the risks specific to the
asset for which the estimates of future flows have not been adjusted.
If the recoverable amount of a cash generating unit ("CGU") is estimated to be
less than its carrying amount, the carrying amount of the CGU is reduced to
its recoverable amount. Where an impairment loss subsequently reverses, the
carrying amount of the cash generating unit is increased to the revised
estimate of its recoverable amount, but only to the extent that the increased
carrying amount does not exceed the carrying amount that would have been
determined had no impairment loss been recognised for the cash generating unit
in prior years.
A reversal of an impairment loss is recognised immediately in profit or loss,
unless the relevant asset is carried at a revalued amount, in which case the
reversal of an impairment loss is treated as a revaluation increase.
2.10 EXPLORATION AND EVALUATION ("E&E") ASSET
For the year ended For the year ended
31 December 2022 31 December 2021
US$'000 US$'000
Balance at the beginning of the year 25,261 63,701
Expenditure for the year 12,175 15,943
Transfer to property, plant, and equipment (12,627) (19,175)
Impairment charge on exploration and evaluation asset - (35,208)
Balance at the end of the year 24,809 25,261
The exploration and evaluation asset relates to the drilling, geological
exploration and sampling of potential ore reserves and can all be attributed
to Egypt (US$24.8 million (2021: US$25.3 million)).
In accordance with the requirements of IAS 36 'Impairment of assets' and IFRS
6 'Exploration for and evaluation of mineral resources' exploration and
evaluation assets are assessed for impairment when facts and circumstances (as
defined in IFRS 6 'Exploration for and evaluation of mineral resources')
suggest that the carrying amount of exploration and evaluation assets may
exceed its recoverable amount.
An impairment trigger assessment was performed in 2021 on the exploration and
evaluation assets, and the asset in Burkina Faso of US$35.2 million relating
to the acquisition of Ampella Mining Limited was impaired in full. No
impairment triggers were noted in the current year following a similar
impairment trigger and review assessment on the Group's E&E assets.
ACCOUNTING POLICY: EXPLORATION, EVALUATION AND DEVELOPMENT EXPENDITURE
Exploration and evaluation expenditures in relation to each separate area of
interest are differentiated between greenfield and brownfield exploration
activities in the year in which they are incurred.
The greenfield and brownfield terms are generally used in the minerals sector
and have been adopted to differentiate high risk remote exploration activity
from near-mine exploration activity:
(a) greenfield exploration refers to territory, where mineral deposits are
not already developed and has the goal of establishing a new mine requiring
new infrastructure, regardless of it being in an established mining field or
in a remote location. Greenfield exploration projects can be subdivided into
grassroots and advanced projects embracing prospecting, geoscientific surveys,
drilling, sample collection and testing, but excludes work of brownfields
nature, pit and shaft sinking and bulk sampling; and
(b) brownfield exploration, also known as near-mine exploration, refers
to areas where mineral deposits were previously developed. In brownfield
exploration, geologists look for deposits near or adjacent to an already
operating mine with the objective of extending its operating life and taking
advantage of the established infrastructure.
Greenfield exploration costs will be expensed as incurred and will not be
capitalised to the balance sheet until a decision is made to pursue a
commercially viable project. Brownfield exploration costs will continue to be
capitalised to the statement of financial position. Brownfield exploration
and evaluation expenditures in relation to each separate area of interest are
recognised as an exploration and evaluation asset in the year in which they
are incurred where the following conditions are satisfied:
· The rights to tenure of the area of interest are current; and
· At least one of the following conditions is also met:
o the exploration and evaluation expenditures are expected to be recouped
through successful development and exploration of the area of interest, or
alternatively, by its sale; or
o exploration and evaluation activities in the area of interest have not at
the reporting date reached a stage which permits a reasonable assessment of
the existence or otherwise of economically recoverable reserves, and active
and significant operations in, or in relation to, the area of interest are
continuing
Exploration and evaluation assets are initially measured at cost and include
acquisition of rights to explore, studies, exploration drilling, trenching,
and sampling and associated activities. General and administrative costs are
only included in the measurement of exploration and evaluation costs where
they are related directly to operational activities in a particular area of
interest.
Exploration and evaluation assets are assessed for impairment when facts and
circumstances (as defined in IFRS 6 'Exploration for and evaluation of mineral
resources') suggest that the carrying amount of exploration and evaluation
assets may exceed its recoverable amount. The recoverable amount of the
exploration and evaluation assets (or the cash generating unit(s) to which it
has been allocated, being no larger than the relevant area of interest) is
estimated to determine the extent of the impairment loss (if any). Where an
impairment loss subsequently reverses, the carrying amount of the asset is
increased to the revised estimate of its recoverable amount, but only to the
extent that the increased carrying amount does not exceed the carrying amount
that would have been determined had no impairment loss been recognised for
the asset in previous years. The E&E asset's recoverable amount which is
the higher of the amount to be recovered through use of the asset and the
amount to be recovered through sale of the asset is determined based on the
provisions of IAS 36, Impairment of Assets.
In accordance with IFRS 6, the full balance of the Groups' E&E assets
which do not currently generate cash inflows is allocated to a producing
mine's cash-generating unit (CGU) for the purpose of assessing and testing the
assets for impairment as this is considered the most appropriate level of
reporting reflecting the way the Groups' operations are managed. Management
considers an operation actively mining precious metals as a distinct CGU and
only E&E expenditure on such active mining operations is capitalised. Any
E&E expenditure on operations exploring for precious metals is expensed.
The application of the Group's accounting policy for E&E expenditure
requires judgement to determine whether future economic benefits are likely
from either future exploitation or sale, or whether activities have not
reached a stage that permits a reasonable assessment of the existence of
reserves.
In addition to applying judgement to determine whether future economic
benefits are likely to arise from the Group's E&E assets or whether
activities have not reached a stage that permits a reasonable assessment of
the existence of reserves, the Group has to apply a number of estimates and
assumptions. The determination of the Group's ore reserves and mineral
resource estimates is itself an estimation process that involves varying
degrees of uncertainty depending on how the resources are classified (i.e.,
measured, indicated or inferred), refer to note 1.3.4. The estimates directly
impact when the Group reclassifies E&E expenditure to mine development
properties. The reclassification process requires management to make certain
estimates and assumptions about future events and circumstances, particularly,
when a decision is made to proceed with development in respect of a particular
exploration area to start economic extraction operation of the ore. Any such
estimates and assumptions may change as new information becomes available. If,
after expenditure is capitalised, information becomes available suggesting
that the recovery of expenditure is unlikely, the relevant capitalised amount
is written off to the statement of profit or loss and other comprehensive
income in the period when the new information becomes available.
Where a decision is made to proceed with development in respect of a
particular area of interest based on the commercial and technical feasibility,
the relevant exploration and evaluation asset is tested for impairment,
reclassified to mine development properties, and then amortised over the life
of the reserves associated with the area of interest once mining operations
have commenced.
Mine development expenditure is recognised at cost less accumulated
amortisation and any impairment losses. When commercial production has
commenced, the associated costs are amortised over the estimated economic life
of the mine on a units of production basis. Changes in factors such as
estimates of proved and probable reserves that affect the unit of production
calculations are dealt with on a prospective basis.
Income derived by the entity prior to the date of commercial production is
offset against the expenditure capitalised and carried in the consolidated
statement of financial position. All revenues recognised after commencement of
commercial production are recognised in accordance with the Revenue Policy
stated in note 2.2.
The commencement date of commercial production is determined when stable and
sustained production capacity has been achieved.
2.11 INVENTORIES
The treatment and classification of mining stockpiles within inventory is
split between current and non-current assets. Priority is placed on the
higher-grade ore, accordingly, stockpiles which will not be consumed within
the next twelve months based on mining and processing forecasts have been
classified to non-current assets. The volume of ore extracted from the open
pit in the year exceeded the volume that could be processed, which has caused
a large increase in the volume and value of the mining stockpiles.
The carrying value of the non-current asset portion is assessed at the lower
of cost or net realisable value. The long-term gold price would have to reduce
to approximately US$1,415 per ounce for the net realisable value to fall below
carrying value.
For the year ended For the year ended
31 December 2022 31 December 2021
US$'000 US$'000
Non-current
Mining stockpiles 94,773 64,756
For the year ended For the year ended
31 December 2022 31 December 2021
US$'000 US$'000
Current
Mining stockpiles, ore in circuit, doré supplies 40,836 60,194
Stores inventory 99,733 74,452
Provision for obsolete stores inventory (6,504) (5,925)
134,065 128,721
The calculation of weighted average costs of mining stockpiles is applied at a
detailed level of ore grade categories. The open pit ore on the Mine ROM is
split into seven different grade categories and the underground ore is treated
as a single high-grade category. Each grade category is costed individually on
a weighted average basis applying costs specifically related to extracting and
moving that grade of ore to and from the Mine ROM pad. The grade categories
range from high-grade underground and open pit ore to low-grade open pit ore.
Costs per contained ounce differ between the various cost categories.
Currently at Sukari, low grade-low (0.4 to 0.5g/t) open pit stockpile material
above the cut-off grade of 0.4g/t has been classified as follows on the
statement of financial position:
· Current assets (ore tonnes scheduled to be processed within the
next twelve months): None
· Non-current assets (ore tonnes not scheduled to be processed
within the next twelve months): 13.7Mt at 0.45g/t
ACCOUNTING POLICY: INVENTORIES
Inventories include mining stockpiles, gold in circuit, doré supplies and
stores and materials. All inventories are stated at the lower of cost and net
realisable value (NRV). The cost of mining stockpiles and gold produced is
determined principally by the weighted average cost method using related
production costs.
Cost of mining stockpiles include costs incurred up to the point of
stockpiling, such as mining and grade control costs, but exclude future costs
of production. Ore extracted is allocated to stockpiles based on estimated
grade, with grades below defined cut-off levels treated as waste and expensed.
Material piled on the ROM pad is accounted for in their separate grade
categories. While held in physically separate stockpiles, the Group blends the
ore from selected stockpiles when feeding the processing plant to achieve the
resultant gold content. In such circumstances, lower and higher-grade ore
stockpiles each represent a raw material, used in conjunction with each other,
to deliver overall gold production, as supported by the relevant feed plan.
The processing of ore in stockpiles occurs in accordance with the LOM
processing plan and is constantly being optimised based on the known Mineral
Reserves, current plant capacity and mine design. Ore tonnes contained in the
stockpiles which exceed the annual tonnes to be milled as per the mine plan in
the following year, are classified as non-current in the statement of
financial position.
Costs of gold inventories include all costs incurred up until production of an
ounce of gold such as milling costs, mining costs and directly attributable
mine general and administration costs but exclude transport costs, refining
costs and royalties. NRV is determined with reference to estimated contained
gold and market gold prices.
Stores and materials consist of consumable stores and are valued at weighted
average cost after appropriate impairment of redundant and slow-moving items.
Consumable stock for which the Group has substantially all the risks and
rewards of ownership are brought onto the statement of financial position as
current assets.
2.12 TRADE AND OTHER PAYABLES
For the year ended For the year ended
31 December 2022 31 December 2021
US$'000 US$'000
Non-current
Other creditors(1) 11,801 10,386
Current
Trade payables 43,493 36,050
Other creditors and accruals(1)(2) 55,902 39,709
99,395 75,759
(1) Included within non-current other creditors and current other
creditors and accruals is $7.3m (2021: $9.8m) and $4.9m (2021: $2.4m)
respectively in relation to the remaining instalments of a $17.6m settlement
agreement signed with EMRA in 2021. By its nature, elements of the cost
recovery mechanism within the Concession Agreement are subject to
interpretation and ongoing audits by EMRA. It is possible that future
settlement agreements may be agreed with EMRA in relation to historic items.
The Directors have assessed that it is not probable that any additional
settlements with EMRA will be required as at 31 December 2022, and therefore
no additional provisions have been recognised within these financial
statements.
Also included within current and non-current other creditors are lease
liabilities of US$1.9m and US$4.5m respectively.
(2) Included within the current other creditors is a US$12m increase in
SGM's stock item accruals as at 31 December 2022 as compared to the prior year
mainly driven by increased material procurement following the underground
transition from Barminco to owner operated model in Q1 2022.
Trade payables principally comprise the amounts outstanding for trade
purchases and ongoing costs. The average credit period taken for trade
purchases is 29 days (2021: 29 days). Trade payables are interest free for
periods ranging from 30 to 180 days. Thereafter interest is charged at
commercial rates.
The Group has financial risk management policies in place to ensure that all
payables are paid within the credit timeframe. Other creditors and accruals
relate to various accruals that have been recognised due to amounts known to
be outstanding for which the related invoices have not yet been received.
The Directors consider that the carrying amount of trade payables approximate
their fair value.
ACCOUNTING POLICY: TRADE AND OTHER PAYABLES
These amounts represent liabilities for goods and services provided to the
Group prior to the end of the financial year which are unpaid. The amounts are
unsecured and are usually paid within 30 days of recognition. Trade and other
payables are presented as current liabilities unless payment is not due within
twelve months after the reporting period. They are recognised initially at
their fair value and subsequently measured at amortised cost using the
effective interest method.
EMPLOYEE BENEFITS
A liability is recognised for benefits accruing to employees in respect of
wages and salaries, annual leave, long service leave, bonuses, pensions, and
sick leave when it is probable that settlement will be required, and they are
capable of being measured reliably.
Liabilities recognised in respect of employee benefits expected to be settled
within twelve months, are measured at their nominal values using the
remuneration rate expected to apply at the time of settlement. Liabilities
recognised in respect of employee benefits which are not expected to be
settled within twelve months are measured at the present value of the
estimated future cash flows to be made by the consolidated entity in respect
of services provided by employees up to the reporting date.
SUPERANNUATION
The Company contributes to, but does not participate in, compulsory
superannuation funds (defined contribution schemes) on behalf of the
employees and Directors in respect of salaries and Directors' fees paid.
Contributions are charged against income as they are made.
2.13 PROVISIONS
For the year ended For the year ended
31 December 2022 31 December 2021
US$'000 US$'000
Current
Employee benefits(1) 2,276 2,798
Other current provisions(2) 980 1,819
3,256 4,617
Non-current
Restoration and rehabilitation(3) 37,396 42,647
Other non-current provisions 29 -
37,425 42,647
Movement in restoration and rehabilitation provision
Balance at beginning of the year 42,647 20,496
(Decrease)/Increase in provision (5,839) 21,875
Interest expense - unwinding of discount 588 276
Balance at end of the year 37,396 42,647
1) Employee benefits relate to annual, sick, and long service leave
entitlements and bonuses.
2) Provision for customs, rebates and withholding taxes.
3) The provision for restoration and rehabilitation has been discounted
by 3.63% (2021: 1.38%) using a US$ applicable rate and inflation applied at
2.37% (2021: 2.5%). The annual review undertaken as at 31 December 2022 has
resulted in a US$5.8 million decrease in the provision (2021: US$21.9 million
increase). The key assumptions within the estimate, the various ranges and
further details are disclosed in note 1.3.6.
The Group is working towards conformance with the Global Industry Standard for
Tailings Management (GISTM). Whilst not a member of ICMM, the Group has
committed to a plan for conformance by August 2023, with respect to its two
active TSFs ("TSF1" and "TSF2") at Sukari by August 2023. In 2022, we
continued to review our conformance, and completed a gap analysis of our
tailings governance and management framework, with reference to the ICMM
Conformance Protocols for the GISTM.
In 2023, we will develop a road-map that further reinforces our tailings
governance and management framework to conform with the GISTM. While this work
is ongoing, it is not currently possible to reliably estimate the value of
incremental costs required to achieve conformance with the new standard and
hence no provision has been recorded.
ACCOUNTING POLICY: RESTORATION AND REHABILITATION
A provision for restoration and rehabilitation is recognised when there is a
present legal or constructive obligation as a result of exploration,
development and production activities undertaken, it is probable that an
outflow of economic benefits will be required to settle the obligation, and
the amount of the provision can be measured reliably. The estimated future
obligations include the costs of dismantling and removal of facilities,
restoration, and monitoring of the affected areas. The provision for future
restoration costs is the best estimate of the present value of the expenditure
required to settle the restoration obligation at the reporting date in
accordance with the requirements of the Concession Agreement. Future
restoration costs are reviewed annually and any changes in the estimate are
reflected in the present value of the restoration provision at each reporting
date.
The provision for restoration and rehabilitation represents the present value
of the Directors' best estimate of the future outflow of economic benefits
that will be required to decommission infrastructure, restore affected areas
by ripping and grading of compacted surfaces to blend with the surroundings,
closure of project components to ensure stability and safety at the Group's
sites at the end of the life of mine. This restoration and rehabilitation
estimate has been made based on benchmark assessments of restoration works
required following mine closure and after considering the projected area
disturbed to date.
Discount rates to present value the future obligations are determined by
reference to risk free rates for periods which approximate the period of the
associated obligation.
The initial estimate of the restoration and rehabilitation provision relating
to exploration, development and mining production activities is capitalised
into the cost of the related asset and amortised on the same basis as the
related asset, unless the present obligation arises from the production of the
inventory in the period, in which case the amount is included in the cost of
production for the period. Changes in the estimate of the provision of
restoration and rehabilitation are treated in the same manner, except that the
unwinding of the effect of discounting on the provision is recognised as a
finance cost within the income statement rather than capitalised to the
related asset.
2.14 Issued capital
31 December 2022 31 December 2021
Number US$'000 Number US$'000
Fully paid ordinary shares
Balance at beginning of the year 1,156,450,695 669,531 1,155,955,384 668,807
Own shares acquired during the year(1) - - - (1,391)
Employee share option scheme - proceeds from shares issued - - 495,311 -
Transfer from share option reserve - 1,463 - 2,115
Balance at end of the year 1,156,450,695 670,994 1,156,450,695 669,531
(1) The US$ Nil (2021: US$1.4m) represents the cost of shares in Centamin
plc purchased in the market and held by the Centamin plc Employee Benefit
Trust to satisfy share awards under the Group's share options plans.
The authorised share capital is an unlimited number of no-par value shares.
Pursuant to the plan rules, at 31 December 2022, the trustee of the deferred
bonus share plan held 1,187,779 ordinary shares (2021: 2,205,280 ordinary
shares).
Fully paid ordinary shares carry one vote per share and carry the right to
dividends. See note 6.3 for more details of the share awards.
ACCOUNTING POLICY: ISSUED CAPITAL
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.
Where the Company or other members of the consolidated Group purchase the
Company's equity share capital, the consideration paid is deducted from the
total shareholders' equity of the Group and/or of the Company as treasury
shares until they are cancelled. Where such shares are subsequently sold or
reissued, any consideration received is included in shareholders' equity of
the Group and/or the Company.
2.15 SHARE OPTION RESERVE
For the year ended For the year ended
31 December 2022 31 December 2021
US$'000 US$'000
Share option reserve
Balance at beginning of the year 4,975 3,343
Share-based payments expense 2,570 4,044
Transfer to accumulated profits - (297)
Transfer to issued capital (1,463) (2,115)
Balance at the end of the year 6,082 4,975
The share option reserve arises on the grant of share options to employees
under the employee share option plan. Amounts are transferred out of the
reserve and into issued capital when the options and warrants are
exercised/vested. Amounts are transferred out of the reserve into accumulated
profits when the options and warrants are forfeited.
2.16 CASH FLOW INFORMATION
(A) RECONCILIATION OF CASH AND CASH EQUIVALENTS
For the purpose of the statement of cash flows, cash and cash equivalents
includes cash on hand and at bank and deposits.
For the year ended For the year ended
31 December 2022 31 December 2021
US$'000 US$'000
Cash and cash equivalents 102,373 207,821
Most funds have been invested in international rolling short-term interest
money market deposits.
The Company secured an RCF on 22 December 2022 (see note 2.6) and the facility
is secured by certain financial covenants on the Company which are applicable
from the date the conditions precedent are met. The covenant specific to the
Company's cash assets states that:
· Liquidity shall at all times exceed USD50 million
The carrying amounts of financial assets pledged as security for the facility,
being the cash is included in 2.16 above.
ACCOUNTING POLICY: CASH AND CASH EQUIVALENTS
Cash comprises cash on hand and demand deposits. Cash equivalents are
short-term, highly liquid investments that are readily convertible to known
amounts of cash and which are subject to an insignificant risk of changes in
value.
(B) RECONCILIATION OF PROFIT BEFORE TAX FOR THE YEAR TO CASH FLOWS FROM
OPERATING ACTIVITIES
For the year ended For the year ended
31 December 2022 31 December 2021
US$'000 US$'000
Profit for the year before tax 171,001 153,647
Adjusted for:
Impairment of exploration and evaluation assets - 35,208
Depreciation/amortisation of property, plant, and equipment 146,769 139,454
Inventory written off 2 21
Inventory obsolescence provision 579 3,135
Foreign exchange gains, net (6,559) (5,158)
Share-based payments expense 2,570 3,747
Finance income (1,214) (196)
Loss on disposal of property, plant, and equipment 899 53
Changes in working capital during the year:
Increase in trade and other receivables (3,049) (14,155)
Increase in inventories (35,940) (13,036)
(Increase)/decrease in prepayments (7,172) 946
Increase in trade and other payables 25,053 8,823
Decrease in provisions (773) (2,616)
Cash flows generated from operating activities 292,166 309,873
(C) NON-CASH FINANCING AND INVESTING ACTIVITIES
During the year there have been no non-cash financing and investing
activities.
3. GROUP FINANCIAL RISK AND CAPITAL MANAGEMENT
3.1 GROUP FINANCIAL RISK MANAGEMENT
3.1.1 FINANCIAL INSTRUMENTS
(a) Group risk management
The Group manages its capital to ensure that entities within the Group will be
able to continue as a going concern while maximising the return to
stakeholders through the optimisation of the cash and equity balance. The
Group's overall strategy remains unchanged from the previous financial year.
The Group has no debt and thus not geared at the year end or in the prior
year. However, on 22 December 2022, the Company entered into an agreement for
a US$150 million Revolving Credit Facility (RCF) with four banks. The facility
will introduce debt and gearing to the Company when drawn down. As at 31
December 2022, the facility was not yet available for draw down as there were
conditions precedent not yet satisfied.
The capital structure currently consists of cash and cash equivalents and
equity attributable to equity holders of the parent, comprising issued capital
and reserves as disclosed in notes 2.14 and 2.15. The Group operates in
Australia, Jersey, Egypt, Burkina Faso, and Côte d'Ivoire. None of the
Group's entities are subject to externally imposed capital requirements.
The Group utilises inflows of funds toward the ongoing exploration and
development of SGM in Egypt and the exploration projects in Côte d'Ivoire and
Egypt.
CATEGORIES OF FINANCIAL ASSETS AND LIABILITIES
For the year ended For the year ended
31 December 2022 31 December 2021
US$'000 US$'000
Financial assets
Non-current
Other receivables - deposits 1,372 101
Current
Cash and cash equivalents 102,373 207,821
Trade and other receivables 35,628 32,579
139,373 240,501
Financial liabilities
Non-current
Other payables 11,801 10,386
Current
Trade and other payables 99,395 75,759
111,196 86,145
(b) Financial risk management and objectives
The Group's overall risk management programme focuses on the unpredictability
of financial markets and seeks to minimise potential risk adverse effects and
ensure that net cash flows are sufficient to support the delivery of the
Group's financial targets whilst protecting future financial security. The
Group continually monitors and tests its forecast financial position against
these objectives.
The Group's activities expose it to a variety of financial risks: market,
commodity, credit, liquidity, foreign exchange, and interest rate. These risks
are managed under Board approved directives through the Audit and Risk
Committee. The Group's principal financial instruments comprise interest
bearing cash and cash equivalents. Other financial instruments include trade
receivables and trade payables, which arise directly from operations.
It is, and has been throughout the period under review, Group policy that no
speculative trading in financial instruments be undertaken.
(c) Market risk
The Group operates internationally and is exposed to foreign exchange risk
arising from various currency exposures, primarily with respect to the
Australian dollar, Great British pound, and Egyptian pound. Foreign exchange
risk arises from future commercial transactions and recognised assets and
liabilities that are denominated in a currency that is not the entity's
functional currency. The risk is measured by regularly monitoring,
forecasting and performing sensitivity analyses on the Group's financial
position.
Financial instruments denominated in Great British pounds, Australian dollars
and Egyptian pounds are as follows:
Great British pound Australian dollar Egyptian pound
31 December 31 December 31 December 31 December 31 December 31 December
2022 2021 2022 2021 2022 2021
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Financial assets
Cash and cash equivalents 622 1,392 343 16,063 837 2,147
622 1,392 343 16,063 837 2,147
Financial liabilities
Trade and other payables 2,084 1,835 11,751 15,530 37,218 23,727
2,084 1,835 11,751 15,530 37,218 23,727
Net exposure (1,462) (443) (11,408) 533 (36,381) (21,580)
The following table summarises the sensitivity of financial instruments held
at the reporting date to movements in the exchange rate of the Great British
pound, Egyptian pound, and Australian dollar to the US dollar, with all other
variables held constant. The sensitivities are based on reasonably possible
changes over a financial year, using the observed range of actual historical
rates.
Impact on profit Impact on equity
31 December 2022 31 December 2021 31 December 2022 31 December 2021
US$'000 US$'000 US$'000 US$'000
US$/GBP increase by 10% 482 634 - -
US$/GBP decrease by 10% (590) (774) - -
US$/AUD increase by 10% 98 866 - -
US$/AUD decrease by 10% (119) (1,058) - -
US$/EGP increase by 10% (2,816) (1,476) - -
US$/EGP decrease by 10% 3,443 1,804 - -
The amounts shown above are the main currencies to which the Group is exposed.
The Group also has small deposits in Euro US$335,586 (2021: US$37,552) and
West African Franc US$1,422,704 (2021: US$863,807), and net payables in Euro
US$5,277,783 (2021: US$2,384,886) and in West African Franc US$3,064,019
(2021: US$1,105,789). A movement of 10% up or down in these currencies would
have a negligible effect on the assets/liabilities.
The Group has not entered into forward foreign exchange contracts. Natural
hedges are utilised wherever possible to offset foreign currency liabilities.
The Company maintains a policy of not hedging its currency positions and
maintains currency holdings in line with underlying requirements and
commitments.
(d) Commodity price risk
The Group's future revenue forecasts are exposed to commodity price
fluctuations, in particular gold that it produces and sells into the global
markets and fuel prices. The market prices of gold is the key driver of the
Group's capacity to generate cash flow. The Group has not entered into any
forward gold or fuel hedging contracts.
Gold price
The table below summarises the impact of increases/decreases of the average
realised gold price on the Group's profit after tax for the year. The
analysis assumes that the average realised gold price per ounce had
increased/decreased by 10% with other variables held constant.
Impact on average realised gold price
31 December 2022 31 December 2021
US$/Oz US$/Oz
Average realised gold price 1,794 1,797
Average realised gold price with impact of increase by 10% US$/oz 1,973 1,977
Average realised gold price with impact of decrease by 10% US$/oz 1,615 1,618
Impact on after tax profit
31 December 2022 31 December 2021
US$'000 US$'000
After tax profit 170,775 153,667
After tax profit with impact of increase by 10% US$/oz 247,106 223,346
After tax profit with impact of decrease by 10% US$/oz 94,444 81,349
Fuel price
Any variation in the fuel price has an impact on the mine production costs.
The analysis assumes that the average fuel price had increased/decreased by a
few US cents per litre with all other variables held constant.
Impact on fuel price
31 December 2022 31 December 2021
US$/litre US$/litre
Fuel price 0.88 0.52
Fuel price with impact of increase by 10% US$/litre 0.99 0.57
Fuel price with impact of decrease by 10% US$/litre 0.81 0.47
Impact on mine production costs
31 December 2022 31 December 2021
US$'000 US$'000
Mine production costs (408,543) (368,327)
Mine production costs with impact of increase by 10% US$/litre 16,943 9,714
Mine production costs with impact of decrease by 10% US$/litre (16,943) (9,714)
(e) Interest rate risk and liquidity risk
The Group's main interest rate risk arises from cash and short-term deposits
and is not considered to be a material risk due to the short-term nature of
these financial instruments. Cash deposits are placed on a term period of no
more than 30 days at a time.
The financial instruments exposed to interest rate risk and the Group's
exposure to interest rate risk as at the balance sheet date were as per the
table below. The table analyses the Group's financial liabilities into
relevant maturity groupings based on their expected settlement profiles for
all non-derivative financial liabilities. The amounts disclosed in the table
are the undiscounted expected cash flows. A separate line for lease
liabilities has been presented in the maturity analysis of the Group's
financial liabilities in the table below.
The Group's liquidity position is managed to ensure that sufficient funds are
available to meet its financial commitments in a timely and cost-effective
manner.
Ultimate responsibility for liquidity risk management rests with the Board,
which has established an appropriate management framework for the management
of the Group's funding requirements. The Group manages liquidity risk by
maintaining adequate cash reserves and management monitors rolling forecasts
of the Group's liquidity based on expected cash flow. The tables in section
(a) to (c) of this note above reflect a balanced view of cash inflows and
outflows and show the implied risk based on those values. Trade payables and
other financial liabilities originate from the financing of assets used in the
Group's ongoing operations. These assets are considered in the Group's overall
liquidity risk. Management continually reviews the Group's liquidity position
including cash flow forecasts to determine the forecast liquidity position and
maintain appropriate liquidity levels.
Weighted average Less than one month One to twelve months One to two years Two to five years Total
effective interest rate US$'000 US$'000 US$'000 US$'000 US$'000
%
31 December 2022
Financial assets
Variable interest rate instruments 1.04% 21,394 54,998 - - 76,392
Non-interest bearing - 61,610 - - - 61,610
83,004 54,998 - - 138,002
Financial liabilities
Non-interest bearing 0% 97,716 2,500 2,500 5,000 107,716
Lease liabilities 234 1,929 1,750 3,136 7,049
97,950 4,429 4,250 8,136 114,765
31 December 2021
Financial assets
Variable interest rate instruments 0.13% 60,278 125,058 - - 185,336
Non-interest bearing 0% 55,064 - - - 55,064
115,342 125,058 - - 240,400
Financial liabilities
Non-interest bearing 0% 73,541 2,851 1,829 6,828 85,022
Lease liabilities 21 260 632 463 1,376
73,535 3,111 2,461 86,398
(f) Credit risk
Credit risk refers to the risk that a counterparty will default on its
contractual obligations resulting in financial loss to the Group. The Group
has adopted a policy of only dealing with creditworthy counterparties and
obtaining sufficient collateral or other security where appropriate, as a
means of mitigating the risk of financial loss from defaults. The Group
measures credit risk on a fair value basis. The Group's credit risk is
concentrated on one entity, the refiner Asahi Refining Canada Ltd, but the
Group has a good credit check on its customer and none of the trade
receivables from the customer has been past due. Also, the cash balances held
in all currencies are held with financial institutions with a high credit
rating.
The gross carrying amount of financial assets recorded in the financial
statements represents the Group's maximum exposure to credit risk without
taking account of the value of collateral or other security obtained.
(g) Fair value
The carrying amount of financial assets and financial liabilities recorded in
the financial statements represents their respective fair values, principally
as a consequence of the short-term maturity thereof.
(h) Mineral reserve and resource statement impact on ore reserves
The following disclosure provides information to help users of the financial
statements understand the judgements made about the future and other sources
of estimation uncertainty. The key sources of estimation uncertainty described
in note 1.3.4 above and the range of possible outcomes are described more
fully below.
Depreciation of capitalised underground mine development costs
Depreciation of capitalised underground mine development costs at SGM is based
on reserve estimates. Management and Directors believe that these estimates
are both realistic and conservative, based on current information. The
sensitivity analysis assumes that the reserve estimate has increased/decreased
by 25% with all other variables held constant.
Decrease by 25% 31 December 2022 Increase by 25%
US$'000 US$'000 US$'000
Amortisation of rehabilitation asset (within mine development properties) (3,978) (2,984) (2,238)
Amortisation of mine development properties (remainder) (83,766) (62,824) (47,118)
Mine development properties - net book value 549,761 571,697 588,149
Property, plant, and equipment - net book value* 1,070,553 1,092,489 1,108,941
*Reflects the impact on the overall property, plant and equipment net book
value at the reporting date from the movements in mine development
amortisation above.
Decrease by 25% 31 December 2021 Increase by 25%
US$'000 US$'000 US$'000
Amortisation of rehabilitation asset (within mine development properties) (1,915) (1,436) (1,077)
Amortisation of mine development properties (remainder) (78,850) (59,138) (44,353)
Mine development properties - net book value 417,945 438,136 453,280
Property, plant, and equipment - net book value* 937,951 958,142 973,286
*Reflects the impact on the overall property, plant and equipment net book
value at the reporting date from the movements in mine development
amortisation above.
The sensitivity analysis presented above includes the impact on the
amortisation amounts of the capitalised deferred stripping asset. The deferred
stripping asset and the rehabilitation asset are included within the Mine
Development Properties category in the Group's property, plant and equipment.
(i) Loan covenants
On 22 December 2022, the Company entered into an agreement for a US$150
million Revolving Credit Facility (RCF) with four banks: Bank of Montreal
(London Branch), HSBC Bank plc, ING Bank N.V. (Amsterdam Branch) and Nedbank
Limited (London Branch) (see note 2.6).
As at 31 December 2022, there were no drawdowns on the facility. The terms of
the facility impose certain financial covenants on the Company in respect of
each Relevant Period with outstanding borrowing, refer to note 2.6 for further
information on the covenant requirements.
However, as at 31 December 2022, the Company's compliance requirements and
obligations in respect of the financial covenants and financial conditions had
not yet started as there were certain conditions precedent that were still to
be satisfied to make the agreement effective. The conditions precedent were
met on 13 March 2023 and the facility is available for draw down from this
date.
3.2 CAPITAL MANAGEMENT
3.2.1 RISK MANAGEMENT
The Group's objectives when managing capital are to:
· safeguard their ability to continue as a going concern, so that they
can continue to provide returns for shareholders and benefits for other
stakeholders; and
· maintain an optimal capital structure to reduce the cost of
capital.
To maintain or adjust the capital structure, the Group may adjust the amount
of dividends paid to owners of the parent, return capital to owners of the
parent or issue new shares.
3.2.2 DIVIDENDS TO OWNERS OF THE PARENT
For the year ended For the year ended
31 December 2022 31 December 2021
US$'000 US$'000
Ordinary shares
Final dividend for the year ended 31 December 2021 of 5.0 US cents per share 57,740 34,461
(2021: Q1 interim dividend for the year ended 31 December 2021 of 3.0 US cents
per share)
Q2 Interim dividend for the year ended 31 December 2022 of 2.5 US cents per 28,464 46,056
share (2021: Q2 Interim dividend for the year ended 31 December 2021 of 4.0 US
cents per share)
Total dividends provided for or paid 86,204 80,517
Dividends to owners of the parent:
Paid in cash 86,204 80,517
4. GROUP STRUCTURE
4.1 SUBSIDIARIES AND CONTROLLED ENTITIES
The parent entity of the Group is Centamin plc, incorporated in Jersey, and
details of its subsidiaries and controlled entities are as follows:
Nature of Country of incorporation Ownership interest
activity
31 December 2022 31 December 2021
% %
Centamin Egypt Limited Holding company Australia((2)) 100 100
Pharaoh Gold Mines NL Holding company Australia((2)) 100 100
(holder of an Egyptian branch)
Sukari Gold Mining Company((10)) Mining company Egypt((5)) 50 50
Centamin Group Services UK Limited Services company UK((3)) 100 100
Centamin West Africa Holdings Limited Holding company UK((4)) 100 100
Sheba Exploration Limited (liquidated) Holding company UK((4)) - 100
(holder of an Ethiopia branch)
Sheba Exploration Holdings Limited (liquidated) ((1)) Exploration company UK((4)) - 100
Centamin Group Services Limited Services company Jersey((9)) 100 100
Centamin Holdings Limited Holding company Jersey((9)) 100 100
MHA Limited Holding company Jersey((9)) 100 100
Centamin Limited (liquidated) Holding company Bermuda((8)) - 100
Ampella Mining Limited Holding company Australia((2)) 100 100
Ampella Mining Gold SARL Exploration company Burkina Faso((6)) 100 100
Ampella Mining SARL Exploration company Burkina Faso((6)) 100 100
Ampella Resources Burkina Faso Exploration company Burkina Faso((6)) 100 100
Konkera SA Mining company Burkina Faso((6)) 100 100
Ampella Mining Côte d'Ivoire Exploration company Côte d'Ivoire((7)) 100 100
Centamin Côte d'Ivoire Exploration company Côte d'Ivoire((7)) 100 100
Ampella Mining Exploration CDI Exploration company Côte d'Ivoire((7)) 100 100
Centamin Exploration CI Exploration company Côte d'Ivoire((7)) 100 100
Centamin Egypt Investments 1 (UK) Limited Holding company UK((11)) 100 100
Centamin Egypt Investments 2 (UK) Limited Holding company UK((11)) 100 100
Centamin Egypt Investments 3 (UK) Limited Holding company UK((11)) 100 100
Centamin Mining Services Egypt LLC Services company Egypt((12)) 100 100
Centamin Central Mining SAE Exploration Egypt((12)) 100 100
Centamin North Mining SAE Exploration Egypt((12)) 100 100
Centamin South Mining SAE Exploration Egypt((12)) 100 100
(1) Previously Sheba Exploration (UK) plc.
(2) Address of all Australian entities: Suite 8, 7 The Esplanade, Mount
Pleasant, WA 6153.
(3) Address of Centamin Group Services UK Limited, Second Floor, 9-10
Savile Row, London, W1S 3PF.
(4) Address of all other UK entities: Hill House, 1 Little New Street,
London, EC4A 3TR.
(5) Address of all Egypt entities (except the new exploration entities in
(11) and (12): 361 El-Horreya Road, Sedi Gaber, Alexandria, Egypt.
(6) Address of all Burkina Faso entities: Ampella Resources Burkina Faso:
11 BP 1974 Ouaga 11. Ampella Mining SARL: 01 BP 1621 Ouaga 01. Ampella Mining
Gold SARL: 11 BP 1974 CMS 11 Ouaga 11. Konkera SA: 11 BP 1974 Ouaga CM11.
(7) Address of all Côte d'Ivoire entities: 20 BP 945 Abidjan 20.
(8) Address of Bermuda entity: Appleby Corporate Services (Bermuda) Ltd,
Canon's Court, 22 Victoria Street, Hamilton HM EX, Bermuda.
(9) Address of all Jersey entities: 2 Mulcaster Street, St Helier, Jersey
JE2 3NJ.
(10) Sukari Gold Mining Company is fully consolidated within the Group under
IFRS 10 'Consolidated financial statements' as if it were a subsidiary due to
it being a controlled entity, reflecting the substance and economic reality of
the Concession Agreement ("CA") (see note 1.3.1, note 4.1 and note 4.2).
(11) Address of all the UK holding companies of the new Egypt exploration
companies; Hill House, 1 Little New Street, London, EC4A 3TR.
(12) Address of the new Egypt exploration companies: c/o Arabella Plaza,
Building 2 First Floor, Office no. 1 to 3, Gamal Abdelansser Street, New
Cairo.
Through its wholly owned subsidiary, PGM, the Company entered into the
Concession Agreement ("CA") with EMRA and the ARE granting PGM and EMRA the
right to explore, develop, mine and sell gold and associated minerals in
specific concession areas located in the Eastern Desert of Egypt. The CA came
into effect under Egyptian law on 13 June 1995.
In 2005 PGM, together with EMRA, were granted an exploitation lease over 160
km(2) surrounding the Sukari Gold Mine site. The exploitation lease was
signed by PGM, EMRA and the Egyptian Minister of Petroleum and gives tenure
for a period of 30 years, commencing 24 May 2005 and extendable by PGM for an
additional 30 years upon PGM providing reasonable commercial justification.
In 2006 SGM was incorporated under the laws of Egypt. SGM was formed to
conduct exploration, development, exploitation, and marketing operations in
accordance with the CA. Responsibility for the day-to-day management of the
project rests with the General Manager, who is appointed by PGM.
The fiscal terms of the CA require that PGM solely funds SGM. PGM is however
entitled to recover from sales revenue recoverable costs, as defined in the
CA. EMRA is entitled to a share of SGM's net production surplus or profit
share (defined as revenue less payment of the fixed royalty to ARE and
recoverable costs). As at 31 December 2015, PGM had not recovered its cost
and, accordingly, no EMRA entitlement had been recognised at that date. During
2016, payments to EMRA commenced as advance profit share distributions. Any
payment made to EMRA pursuant to these provisions of the CA are recognised as
dividend paid to the non-controlling interest in SGM.
4.2 JOINT ARRANGEMENTS
The consolidated entity has interests in the following joint arrangements:
Name of joint operation Percentage interest
31 December 2022 31 December 2021
% %
Sukari Gold Mining Company(1) 50 50
Egyptian Pharaoh Investments(2) 50 50
(1) Sukari Gold Mining Company is fully consolidated within the Group
under IFRS 10 'Consolidated financial statements' as if it were a subsidiary
due to it being a controlled entity, reflecting the substance and economic
reality of the Concession Agreement ("CA") (see note 1.3.1, note 4.1 and note
4.2).
(2) Dormant company.
The Group has a US$1 (cash) interest in the Egyptian Pharaoh Investments joint
operation. The amount is included in the consolidated financial statements of
the Group. There are no capital commitments arising from the Group's interests
in this joint operation.
ACCOUNTING POLICY: INTERESTS IN JOINT ARRANGEMENTS
The Group applies IFRS 11 'Joint arrangements'. Under IFRS 11, investments in
joint arrangements are classified as either joint operations or joint ventures
depending on the contractual rights and obligations of each investor. Joint
ventures are accounted for using the equity method. In relation to its
interests in joint operations, the Group recognises its share of assets and
liabilities; revenue from the sale of its share of the output; and its share
of expenses.
SGM is wholly consolidated within the Centamin Group of companies, reflecting
the substance and economic reality of the CA (see note 1.3.1 note 4.1 and
note 4.2).
5. UNRECOGNISED ITEMS
5.1 CONTINGENT LIABILITIES AND CONTINGENT ASSETS
CONTINGENT LIABILITIES
Concession Agreement court case
On 30 October 2012, the Administrative Court in Egypt handed down a judgment
in relation to a claim brought by, amongst others, an independent member of a
previous parliament, in which he argued for the nullification of the agreement
that confers on the Group rights to operate in Egypt. This agreement, the
Concession Agreement, was entered into between the ARE, EMRA and Centamin
plc's wholly owned subsidiary, Pharaoh Gold Mines NL, and was approved by the
People's Assembly as Law 222 of 1994.
In summary, that judgment states that, although the Concession Agreement
itself remains valid and in force, insufficient evidence had been submitted to
court to demonstrate that the 160km² exploitation lease between PGM and EMRA
had received approval from the relevant minister as required by the terms of
the Concession Agreement. Accordingly, the Court found that the exploitation
lease in respect of the area of 160km² was not valid although it stated that
there was in existence such a lease in respect of an area of 3km². Centamin
plc, however, is in possession of the executed original lease documentation
which clearly shows that the 160km² exploitation lease was approved by the
Minister of Petroleum and Mineral Resources. It appears that an executed
original document was not supplied to the court in the first instance.
Upon notification of the judgment the Group took immediate steps to protect
its ability to continue to operate the mine at Sukari. These included lodging
a formal appeal before the Supreme Administrative Court on 26 November 2012.
In addition, in conjunction with the formal appeal, the Group applied to the
Supreme Administrative Court to suspend the initial decision until such time
as the court was able to consider and rule on the merits of the appeal. On 20
March 2013, the Court upheld this application thus suspending the initial
decision and providing assurance that normal operations would be able to
continue whilst the appeal process was underway.
EMRA lodged its own appeal in relation to this matter on 27 November 2012, the
day after the Company's appeal was lodged, supporting the Group's view in this
matter. Furthermore, in late December 2012, the Minister of Petroleum lodged a
supporting appeal and shortly thereafter publicly indicated that, in his view,
the terms of the Concession Agreement were fair, and that the exploitation
lease was valid. The Minister of Petroleum also expressed support for the
investment and expertise that Centamin plc brings to the country.
The Group believes this demonstrates the government's commitment to their
investment at Sukari and the government's desire to stimulate further
investment in the Egyptian mining industry.
In 2016 the Supreme Administrative Court stayed the Concession Agreement
appeal until the Supreme Constitutional Court has ruled on the validity of Law
no. 32 of 2014. Law no. 32 of 2014 restricts the right of third parties to
challenge contractual agreements between the Egyptian government and an
investor and has partial retrospective effect, applying to any cases then
before the courts but in which no final judgment had been given. Law 32
should, therefore, render the third-party challenge to the Concession
Agreement inadmissible (as no final judgment has yet been given in that case),
although the validity of Law 32 was challenged and has been under review by
the Supreme Constitutional Court. The court finally issued judgment in the
case on 14 January 2023, dismissing the various challenges and upholding the
constitutionality of Law 32. The Group's Egyptian lawyers have now filed an
application to the Supreme Administrative Court to resume proceedings in the
original appeal (this is a purely procedural step) and they will then make a
further application to the Supreme Administrative Court, on behalf of PGM,
asking the court to confirm that the original complainant had no capacity to
bring the claim in the first place, as he was not a party to the Concession
Agreement. They will ask the court to reject the case in its entirety and
treat it as never having been filed. If that occurs, the earlier judgment at
first instance would be cancelled and the appeal proceedings would be
terminated.
The Group's Egyptian lawyers have confirmed that continuing operations at
Sukari will be unaffected by the judgment in the Law 32 case, as they are
protected by the suspension of enforcement of the first instance judgment,
which was granted pending the hearing of the appeal, and which will remain
effective until final judgment is handed down by the Supreme Administrative
Court or the original case is dismissed and the first instance judgment
cancelled.
Refer to note 2.12 for additional information on the EMRA position with
respect to provisions.
CONTINGENT ASSETS
There were no contingent assets at year end (2021: nil).
5.2 DIVIDENDS PER SHARE
The dividends paid in 2022 were US$86 million and are reflected in the
consolidated statement of changes in equity for the year (2021: US$81
million).
A final dividend in respect of the year ended 31 December 2022 of 2.5 US cents
per share, totalling approximately US$29 million has been proposed by the
Board of Directors and is subject to shareholder approval at the annual
general meeting on 23 May 2023. These financial statements do not reflect the
dividend payable.
As announced on 9 January 2017, the update to the Company's dividend policy
sets a minimum payout level relative to cash flow while considering the
financial condition of, and outlook for, the Company. When determining the
amount to be paid, the Board will take into consideration the underlying
profitability of the Company and significant known or expected funding
commitments. Specifically, the Board will aim to approve an annual dividend of
at least 30% of the Company's net cash flow after sustaining capital costs and
following the payment of profit share due to the government of Egypt.
5.3 SUBSEQUENT EVENTS
As referred to in note 5.2, subsequent to the year end, the Board proposed a
final dividend for 2022 of 2.5 US cents per share. Subject to shareholder
approval at the annual general meeting on 23 May 2023, the final dividend will
be paid on 23 June 2023 to shareholders on record date of 02 June 2023.
Also refer to note 5.1 above for more information on the Law 32 judgement that
was handed down in January 2023.
The Company's compliance requirements and obligations in respect of the US$150
million Revolving Credit Facility (RCF) had not yet commenced as at 31
December 2022 as there were certain conditions precedent that were still to be
satisfied to make the agreement effective. The conditions precedent were met
on 13 March 2023 subsequent to year end and before the annual financial
statements were signed and the facility is available for draw down from this
date the conditions precedent were met.
Other than as noted above, there were no other significant events occurring
after the reporting date requiring disclosure in the financial statements.
6. OTHER INFORMATION
6.1 RELATED PARTY TRANSACTIONS
(A) EQUITY INTERESTS IN RELATED PARTIES
Equity interests in subsidiaries
Details of the percentage of ordinary shares held in subsidiaries are
disclosed in note 4.1.
Equity interest in associates and jointly controlled arrangements
Details of interests in joint ventures are disclosed in note 4.2.
(B) KEY MANAGEMENT PERSONNEL COMPENSATION
Key management personnel are persons having authority and responsibility for
planning, directing, and controlling the activities of the Group, directly or
indirectly, including any Director (executive or otherwise) of the Group.
The aggregate compensation made to key management personnel of the
consolidated entity is set out below:
For the year ended For the year ended
31 December 2022 31 December 2021
US$ US$
Short-term employee benefits 10,261,960 7,370,964
Post-employment benefits 1,320 7,852
Share-based payments 1,949,569 1,500,304
12,212,849 8,879,120
(C) KEY MANAGEMENT PERSONNEL EQUITY HOLDINGS
The details of the movement in key management personnel equity holdings of
fully paid ordinary shares in Centamin plc during the financial year ended 31
December 2022 are as follows:
For the year ended Balance at Granted as remuneration ("DBSP") Granted as remuneration ("PSP") Net other change - share plan lapse(1) Net other change(2) Balance at
1 January 2022
31 December 2022(3)
31 December 2022
M Horgan 1,281,405 - 979,000 - 65,788 2,326,193
R Jerrard 2,077,000 - 821,000 (617,000) 67,000 2,348,000
J Rutherford 250,000 - - - - 250,000
S Eyre 15,000 - - - - 15,000
M Bankes 289,000 - - - 30,000 319,000
M Cloete 15,000 - - - - 15,000
C Farrow 30,000 - - - - 30,000
I Fawzy 140,000 - - - - 140,000
H Faul - - - - - -
Gustav Du Toit 950,000 - 492,000 - - 1,442,000
A Hassouna 236,931 - 492,000 (31,000) - 697,931
C Barker 300,000 - 471,000 - - 771,000
M Stoner - - 314,000 - - 314,000
H Bills 500,000 - 480,000 - - 980,000
P Cannon 250,000 - 377,000 - - 627,000
C Murray 474,000 - 461,000 - (24,000) 911,000
A Carse 648,688 - 377,000 (169,000) - 856,688
D Le Masurier 517,300 - 287,000 (127,000) - 677,300
R Nel 401,973 - 332,000 (110,000) (16,667) 607,306
(1) 'Net other change - share plan lapse' relates to awards that have
lapsed due to the full performance conditions not being met on the 2019 grant.
(2) 'Net other change' relates to the on-market acquisition or disposal of
fully paid ordinary shares.
(3) Balance includes unvested grants under the Company's performance share
plan.
Since 31 December 2022 to the date of this report there have been no
transactions notified by the Company in accordance with the requirements of
Article 19 of the UK Market Abuse Regulation (Regulation (EU) 596/2014.
The details of the movement in key management personnel equity holdings of
fully paid ordinary shares in Centamin plc during the financial year ended 31
December 2021 are as follows:
For the year ended Balance at Granted as remuneration ("DBSP") Granted as remuneration ("PSP") Net other change - share plan lapse(1) Net other change Balance at
1 January 2021
31 December 2021(2)
31 December 2021
M Horgan 606,405 - 650,000 - 25,000 1,281,405
R Jerrard 1,882,000 - 570,000 (408,000) 33,000 2,077,000
J Rutherford 200,000 - - - 50,000 250,000
S Eyre - - - - 15,000 15,000
M Bankes 190,000 - - - 99,000 289,000
M Cloete 15,000 - - - - 15,000
C Farrow - - - - 30,000 30,000
I Fawzy - - - - 140,000 140,000
H Faul - - - - - -
Y El-Raghy 691,662 - 160,000 (104,000) - 747,662
Gustav Du Toit - 510,000 440,000 - - 950,000
H Bills 200,000 - 300,000 - - 500,000
P Cannon - - 250,000 - - 250,000
J Singleton 746,000 - 250,000 - - 996,000
C Murray 200,000 - 250,000 - 24,000 474,000
A Carse 541,592 - 250,000 (168,000) 25,096 648,688
D Le Masurier 437,300 - 200,000 (120,000) - 517,300
R Nel 330,000 - 200,000 (96,000) (32,027) 401,973
(1) 'Net other change' relates to the on-market acquisition or disposal
of fully paid ordinary shares.
(2) Balance includes unvested grants under the Company's performance share
plan.
(D) KEY MANAGEMENT PERSONNEL SHARE OPTION HOLDINGS
There were no options held, granted, or exercised during the year by Directors
or senior management in respect of ordinary shares in Centamin plc.
(E) OTHER TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL
The related party transactions for the year ended 31 December 2022 are
summarised below:
· salaries, superannuation contributions, bonuses, LTIs, consulting
and Directors' fees paid to Directors during the year ended 31 December 2022
amounted to US$3,918,404 (31 December 2021: US$3,694,236).
(F) TRANSACTIONS WITH THE GOVERNMENT OF EGYPT
Royalty costs attributable to the government of Egypt of US$23,842,287 (2021:
US$21,671,928) were incurred in 2022. Profit share to EMRA of US$ 35,492,459
(2021: US$75,200,000) was incurred in 2022.
(G) TRANSACTIONS WITH OTHER RELATED PARTIES
Other related parties include the parent entity, subsidiaries, and other
related parties.
During the financial year, the Company recognised tax payable in respect of
the tax liabilities of its wholly owned subsidiaries.
Payments to/from the Company are made in accordance with terms of the tax
funding arrangement.
During the financial year the Company provided funds to and received funding
from subsidiaries.
All amounts advanced to related parties are unsecured. No expense has been
recognised in the year for bad or doubtful debts in respect of amounts owed by
related parties.
Transactions and balances between the Company and its subsidiaries were
eliminated in the preparation of the consolidated financial statements of the
Group.
6.2 CONTRIBUTIONS TO EGYPT
(A) GOLD SALES AGREEMENT
On 20 December 2016, SGM entered a contract with the Central Bank of Egypt
("CBE"). The agreement provides that the parties may elect, on a monthly
basis, for the CBE to supply SGM with its local Egyptian currency requirements
for that month to a maximum value of EGP 80 million (2021: EGP 80 million). In
return, SGM facilitates the purchase of refined gold bullion for the CBE from
SGM's refiner, Asahi Refining Canada Ltd. This transaction has been entered
into as SGM requires local currency for its operations in Egypt (it receives
its revenue for gold sales in US dollars). Forty-five transactions have been
entered into at the date of this report, eleven of which in the current year,
pursuant to this agreement, and the values related thereto are as follows:
For the year ended For the year ended
31 December 2022
31 December 2021
US$'000
US$'000
Gold purchased 50,497 56,147
Refining costs 28 31
Freight costs 56 55
50,581 56,233
For the year ended For the year ended
31 December 2022
31 December 2021
Oz
Oz
Gold purchased 27,907 31,219
At 31 December 2022 the amount receivable from CBE is approximately
US$23,681 (2021: US$24,761 net payable).
(B) UNIVERSITY GRANT
During 2018, the Group together with Sami El-Raghy and the University of
Alexandria Faculty of Science initiated a sponsored scholarship agreement, the
Michael Kriewaldt Scholarships, to outstanding geology major students to enrol
at the postgraduate research programme of the geology department of the
University for their MSc and/or PhD in mining and mineral resources. An amount
of EGP10,000,000 was deposited with an Egyptian bank as a nucleus of the
scholarship fund in a fixed deposit account, with contributions of
EGP7,330,000 from PGM and EGP2,670,000 from Sami El-Raghy. The interest earned
on the account will be put towards the cost of the scholarships and will be
administered by the University on the conditions set out in the agreement.
This amount has been accounted for under donations expense in profit and loss
in 2021 and in 2022 the interest earned has also been accounted for under
donations expense.
6.3 SHARE-BASED PAYMENTS
PERFORMANCE SHARE PLAN
The Company's shareholder approved Performance Share Plan ("PSP") allows the
Company the right to grant awards (as defined below) to employees of the
Group. Awards may take the form of either conditional share awards, where
shares are transferred conditionally upon the satisfaction of performance
conditions; or share options, which may take the form of nil cost options or
have a nominal exercise price, the exercise of which is again subject to
satisfaction of applicable performance conditions.
The awards granted in May 2022 will vest following the passing of three years.
Vesting will be subject to the satisfaction of the performance conditions (and
for Executive Directors a full two-year post-vesting holding period). Awards
will vest based upon a blend of three-year relative TSR, cash flow and
production targets, full details of which are set out in the Directors'
Remuneration Report. These measures are assessed by reference to current
market practice and the Remuneration Committee will have regard to current
market practice when establishing the precise performance conditions for
awards.
To date, the Company has granted the following conditional awards to employees
of the Group:
June 2018 awards
Of the 4,908,000 awards granted on 27 June 2018 under the PSP, 495,311 awards
vested to eligible participants (27 in total).
June 2019 awards
Due to the performance conditions not being met, all remaining awards eligible
to participants lapsed in 2021.
June 2020 awards
Of the 2,582,500 awards granted on 5 June 2020 under the PSP, 1,370,625 awards
remain granted to eligible participants (9 in total) applying the following
performance criteria:
· 50% of the award shall be assessed by reference to a target total
shareholder return;
· 25% of the award shall be assessed by reference to compound
growth in adjusted free cash flow; and
· 25% of the award shall be assessed by reference to compound
growth in gold production
April 2021 awards
Of the 5,945,000 awards granted on 30 April 2021 under the PSP, 5,375,000
awards remain granted to eligible participants (28 in total) applying the
following performance criteria:
· 50% of the award shall be assessed by reference to a target total
shareholder return;
· 25% of the award shall be assessed by reference to compound
growth in adjusted free cash flow; and
· 25% of the award shall be assessed by reference to compound
growth in gold production.
May 2022 awards
Of the 9,042,000 contingent share awards granted on 20 May 2022 under the
Incentive Share Plan ("ISP"), 9,042,000 awards remain granted to eligible
participants (34 in total) applying the following performance criteria:
· 50% of the award shall be assessed by reference to a target total
shareholder return;
· 25% of the award shall be assessed by reference to compound
growth in adjusted free cash flow; and
· 25% of the award shall be assessed by reference to compound
growth in gold production.
Conditional share awards and options together constitute 'awards' under the
plan and those in receipt of awards are 'award holders'.
A detailed summary of the scheme rules is set out in the 2022 AGM proxy
materials which are available at www.centamin.com. In brief, awards will vest
following the passing of three years from the date of the award and vesting
will be subject to satisfaction of performance conditions. The above measures
are assessed by reference to current market practice and the Remuneration
Committee will have regard to market practice when establishing the precise
performance conditions for future awards.
Where the performance conditions have been met, in the case of conditional
awards awarded to certain participants, 50% of the total shares under the
award will be issued or transferred to the award holders on or as soon as
possible following the specified vesting date, with the remaining 50% being
issued or transferred on the second anniversary of the vesting date.
Performance share plan awards granted during the year:
Grant date ISP 2022
20 May 2022
Number of instruments 1,524,223
TSR: fair value at grant date GBP((1)(2)) 0.34
TSR: fair value at grant date US$((1)(2)) 0.43
Adjusted free cash flow and gold production: fair value at grant date 0.73
GBP((1)(2))
Adjusted free cash flow and gold production: fair value at grant date 0.92
US$((1)(2))
Vesting period (years) 3
Holding period applicable to the award (years)((2)) 2
Expected volatility (%) 51.0%
Expected dividend yield (%) 0%
Number of instruments 7,517,777
TSR: fair value at grant date GBP((1)) 0.39
TSR: fair value at grant date US$((1)) 0.50
Adjusted free cash flow and gold production: fair value at grant date GBP((1)) 0.83
Adjusted free cash flow and gold production: fair value at grant date US$((1)) 1.06
Vesting period (years) 3
Holding period applicable to the award (years) 0
Expected volatility (%) 51.0%
Expected dividend yield (%) 0%
(1) The vesting of 50% of the awards granted under this plan are dependent
on a TSR performance condition. As relative TSR is defined as a market
condition under IFRS 2 'Share-based payments', this requires that the
valuation model used considers the anticipated performance outcome. We have
therefore applied a Monte-Carlo simulation model. The simulation model
considers the probability of performance based on the expected volatility of
Centamin and the peer group companies and the expected correlation of returns
between the companies in the comparator group. The remaining 50% of the awards
are subject to adjusted free cash flow and gold production performance
conditions. As these are classified as non-market conditions under IFRS 2 they
do not need to be considered when determining the fair value. These grants
have been valued using a Black‑Scholes model. The fair value calculated was
then converted at the closing GBP:US$ foreign exchange rate on that day.
(2) A discount for lack of marketability has been applied to account for
the decrease in value of the award by reason of the two-year holding period
restriction.
RESTRICTED SHARE AWARDS ("RSA")
Under the Company's Incentive Share Plan ("ISP"), the Company has restricted
share awards, which are a long-term share incentive arrangement for senior
management (but not Executive Directors) and other employees (participants).
The RSA awards shall be subject to the terms and conditions of the ISP and
shall ordinarily vest in three equal tranches on the anniversary of the grant
date, conditional upon the continued employment with the Group.
RSA awards granted during the year:
Grant date RSA 2022
20 May 2022
Number of instruments 2,010,000
Fair value at grant date Tranche 1 £(1) 0.80
Fair value at grant date Tranche 1 US$(1) 1.01
Fair value at grant date Tranche 2 £(1) 0.75
Fair value at grant date Tranche 2 US$(1) 0.95
Fair value at grant date Tranche 3 £(1) 0.71
Fair value at grant date Tranche 3 US$(1) 0.90
Vesting period Tranche 1 (years)(2) 1
Vesting period Tranche 2 (years)(2) 2
Vesting period Tranche 3 (years)(2) 3
Expected dividend yield Tranche 1 (%) 4.4%
Expected dividend yield Tranche 2 (%) 5.1%
Expected dividend yield Tranche 3 (%) 5.2%
(1) The fair value of the shares awarded under the RSA were calculated by
using the closing share price on grant date, converted at the closing GBP:US$
foreign exchange rate on that day. No other factors were considered in
determining the fair value of the shares awarded under the RSA.
(2) Variable vesting dependent on one to three years of continuous
employment.
ACCOUNTING POLICY: SHARE-BASED PAYMENTS
Equity settled share-based payments with employees and others providing
similar services are measured at the fair value of the equity instrument at
grant date. Fair value is measured using the Black-Scholes model. Where
share-based payments are subject to market conditions, fair value was measured
using a Monte-Carlo simulation. A discount for lack of marketability has been
applied to account for the decrease in value of the award by reason of the
two-year holding period restriction. The fair value determined at the grant
date of the equity settled share-based payments is expensed over the vesting
period, based on the consolidated entity's estimate of shares that will
eventually vest.
SHARE-BASED PAYMENTS
Equity settled share-based transactions with other parties are measured at the
fair value of the goods or services received, except where the fair value
cannot be estimated reliably, in which case they are measured at the fair
value of the equity instruments granted, measured at the date the entity
obtains the goods or the counterparty renders the service. The fair value of
the employee services received in exchange for the grant of the options is
recognised as an expense. The total amount to be expensed is determined by
reference to the fair value of the options granted:
· including any market performance conditions (for example, an
entity's share price);
· excluding the impact of any service and non-market performance
vesting conditions (for example, profitability and remaining an employee of
the entity over a specified period); and
· including the impact of any non-vesting conditions (for example,
the requirement for employees to save or holding shares for a specific period)
When the options are exercised, the Company issues new shares. The proceeds
received net of any directly attributable transaction costs are credited to
share capital (nominal value) and share premium. The expected life used in the
model has been adjusted, based on management's best estimate, for the effects
of non-transferability, exercise restrictions, and behavioural considerations.
Further details on how the fair value of equity settled share-based
transactions has been determined can be found above. At each reporting date,
the Group revises its estimate of the number of equity instruments expected to
vest. The impact of the revision of the original estimates, if any, is
recognised in profit or loss over the remaining vesting period, with
corresponding adjustment to the equity settled employee benefits reserve.
6.4 EARNINGS PER SHARE ("EPS") ATTRIBUTABLE TO OWNERS OF THE PARENT
For the year ended For the year ended
31 December 2022 31 December 2021
US cents per share US cents per share
Basic earnings per share 6.287 8.811
Diluted earnings per share 6.203 8.738
BASIC EARNINGS PER SHARE ATTRIBUTABLE TO OWNERS OF THE PARENT
The earnings and weighted average number of ordinary shares used in the
calculation of basic earnings per share are as follows:
For the year ended For the year ended
31 December 2022 31 December 2021
US$'000 US$'000
Earnings used in the calculation of basic EPS 72,490 101,527
For the year ended
31 December 2021
For the year ended
31 December 2022 Number of Shares
Number of shares
Weighted average number of ordinary shares for the purpose of basic EPS 1,152,960,534 1,152,246,924
DILUTED EARNINGS PER SHARE ATTRIBUTED TO OWNERS OF THE PARENT
The earnings and weighted average number of ordinary shares used in the
calculation of diluted earnings per share are as follows:
For the year ended For the year ended
31 December 2022 31 December 2021
US$'000 US$'000
Earnings used in the calculation of diluted EPS 72,490 101,527
For the year ended For the year ended
31 December 2022 31 December 2021
Number of shares Number of shares
Weighted average number of ordinary shares for the purpose of basic EPS 1,152,960,534 1,152,246,924
Shares deemed to be issued for no consideration in respect of employee options 15,597,563 9,717,092
Weighted average number of ordinary shares used in the calculation of diluted 1,168,558,097 1,161,964,016
EPS
No potential ordinary shares were excluded from the calculation of weighted
average number of ordinary shares for the purpose of diluted earnings per
share.
6.5 Auditors' remuneration
The analysis of the auditors' remuneration is as follows:
For the year ended For the year ended
31 December 2022 31 December 2021
US$'000 US$'000
Fees payable to the Company's auditors and their associates for the audit of
the Company's annual financial statements
Audit fee for the current year audit(1) 630 586
Fees payable to the Company's auditors and their associates for other services
to the Group
Audit fee of the Company's subsidiaries 126 132
Total audit fees 756 718
Non-audit fees:
Audit related assurance services - interim review 139 138
Total non-audit fees 139 138
(1) 2022 fee includes amounts in relation to the base audit fee US$562k
(2021: US$566k) and prior year overruns of US$26k, new applicable regulatory
and auditing standards US$37k (2021: US$ nil) and corporate reporting review
US$ nil (2021: US$20k).
All audit fees are billed in GBP and were translated at an average foreign
exchange rate for the year ended 31 December 2022 of US$1.23:GB£1 (rate on
31 December 2021: US$1.35:GB£1). Not included within the above amounts are
auditors' expenses (recharged to the Company) of US$19k (2021: US$10k).
6.6 GENERAL INFORMATION
Centamin plc (the "Company") is a listed public company, incorporated and
domiciled in Jersey and operating through subsidiaries and jointly controlled
entities operating in Egypt, Burkina Faso, Côte d'Ivoire, United Kingdom,
Jersey and Australia. It is the Parent Company of the Group, comprising the
Company and its subsidiaries and joint arrangements.
Registered office and principal place of business:
Centamin plc
2 Mulcaster Street
St Helier
Jersey
JE2 3NJ
The nature of the Group's operations and its principal activities are set out
in the Governance Report and the Strategic Report of the 2022 Annual Report.
- END -
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